Two of Goldman Sachs’ four co-heads of securities trading are leaving in a fresh sign of heightened staff turnover at the bank, which is facing pressure on its traditional sources of profit.
David Heller and Edward Eisler are leaving and Isabelle Ealet, the London-based head of commodities, will be promoted to co-head, the bank said in an internal staff memorandum. Goldman declined to comment on the departures, however a person familiar with the matter said they had left of their own accord.
Mr Heller, 44, had been touted as a potential successor to chief executive Lloyd Blankfein but he has recently spent more time cultivating interests outside the bank, including bidding to acquire a stake in the New York Mets baseball team. He is also a top fundraiser for Barack Obama, last year attending a dinner party in New York with Rahm Emanuel, the mayor of Chicago and the president’s former chief of staff. Both of the leavers will remain advisors to Goldman.
Goldman is due to report fourth-quarter earnings next week, with analysts expecting the bank to return to profit after a rare loss in the previous quarter. But the forecast is for continued year-on-year declines in fixed income and equity trading, which are facing both cyclical and more enduring challenges.
In a sign of one of the largest issues, Citigroup analysts cut their 2012 earnings estimate for Goldman by 20 per cent this week, citing a “cyclically weak fundamental backdrop and ongoing structural regulatory headwinds”.
In particular, the introduction of the Volcker rule, which prohibits banks from proprietary trading, is due to hit revenues at Goldman when it is implemented later this year. The ongoing instability in the eurozone has also kept investors out of markets and reducing revenues across Wall Street.
Goldman has been cutting costs, including a rare bout of job cuts. In November, it named the smallest group of new managing directors since the 2008 height of the financial crisis, with 261 staff appointed to the prestigious title that sits below partner in the Goldman hierarchy.
Senior bankers across the industry say they are finding it harder to keep talented traders as new regulations and lower bonuses make hedge funds an attractive alternative for some staff. Two years ago, before the current round of rules were developed, Mr Heller himself was cited for his views on staff retention.
A Sandler O’Neill analyst, quoted in Barron’s magazine, said he had come from a meeting with Goldman executives where Mr Heller “stressed that in his 21 years at [Goldman], he has never felt better about the firm’s ability to retain talent than he does today”.
Among the promotions, George Stein, managing director of Commodity Talent, a headhunter, said that Ms Ealet had run successfully “what is widely considered to be the best commodities unit on Wall Street”. Mr Stein said: “She’s getting a richly deserved promotion to the daunting task of handling trading in multiple asset classes on a global scale.”
In one of a string of internal memos, Goldman announced three new members of its management committee: Eric Lane, Stephen Scherr and Ashok Varadhan.
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