BrokerDealers’ Prime Brokers Cutting Back on HF Clients:Goldman Sachs Squeeze

Posted on August 5, 2014August 5, 2014 by admin

BrokerDealer.com blog update courtesy of extract from Finalternatives.com

New U.S. banking regulations are putting the squeeze on prime brokerage units, and none are feeling it more than clients of brokerdealer Goldman Sachs.

The Wall Street giant has cut ties with some unprofitable clients and begun to impose new fees on others, as it seeks to cut its assets to increase its leverage ratio, which must rise from 4.5% to at least 5% by 2018. “It’s a total redefinition of what’s a good customer,” S3 Partners’ Robert Sloan told The Wall Street Journal.

In order to reduce its balance sheet, Goldman has asked clients to withdraw cash held in their prime-brokerage accounts. It is also charging more to finance trades and has added fees for untapped credit lines, according to the Journal.

Whereas Goldman and other prime brokerages have previously evaluated their business based on revenue, Goldman is now telling clients it is judging theirs on return on assets. The result has been that some hedge funds that produce little or no return for the bank have been asked to take their business elsewhere.

For the full coverage from Finalternatives.com, please click here.

Jobs Available: Wall Street Scrambles to Hire Next Gen BrokerDealers

Posted on July 6, 2014 by admin

BrokerDealer.com blog post courtesy of extract from July 5 story from The New York Times

A battle is raging on Wall Street as never before, with powerful factions scrambling for control of a precious resource.

On one side are the giant investment banks and broker-dealers, with names like Morgan Stanley and Goldman Sachs. Lined up against them, but also warring among themselves, are the giants of private equity — Kohlberg Kravis Roberts, Apollo Global Management and the Blackstone Group, to name just three. And the private-equity firms just happen to be the banks’ clients.

The prize they are fighting for is young talent.

This summer, dozens of junior bankers in their early to mid-20s will start jobs in private equity after spending their first two years out of college working at investment banks. Private-equity firms use billions of dollars of cash and plenty of debt to buy entire companies. They are seen by many young strivers as the next rung on an elite career ladder, promising higher status and more pay — around $300,000 a year, including salary and bonus, roughly double what a second-year banker might earn at Goldman.

But for junior bankers, who are known as analysts, securing such a job means stepping into the middle of a Wall Street struggle that has intensified since the financial crisis.

For the full story, please click here.

BrokerDealer Goldman Sachs ($GS) Accused of Underwriting Boy’s Club Culture; Suit Stipulates Strip Club Mentality

Posted on July 2, 2014 by admin

Goldman Sachs Group Inc. (GS) , the global investment bank/broker-dealer was accused of widespread gender discrimination and promoting a “boy’s club” atmosphere that included bouts of binge drinking and trips to strip clubs, as two former female employees seek to expand their lawsuit against the firm with new evidence.

Photographer: Richard Perry/The New York Times via Redux. H. Cristina Chen-Oster, right, and Shana Orlich in New York City in this Sept. 15, 2010 file photo.

As reported by Bloomberg LP, “The women asked a federal judge in Manhattan today to let them sue on behalf of current and former female associates and vice presidents. Support for their claims includes statements of former Goldman Sachs employees, expert statistical analyses and evidence on earnings and promotions from the firm’s own records, they said in a court filing.”

In the suit, initially filed in 2010, the plaintiffs stipulate that female vice presidents of one of the world’s biggest banks earned 21 percent less than men and female associates made 8 percent less. About 23 percent fewer female vice presidents were promoted to managing director of the New York-based bank relative to their male counterparts, they said.

Goldman Sachs has denied the women’s claims and is fighting the case.