Goldman Sachs has morphed from old-school investment bank to modern investment and trading house with huge earnings growth and, despite heavy criticism for opaqueness, where it goes, others are bound to follow. Geraldine Lambe reports.Good results are not always good news. At least, they do not always generate good news. Goldman Sachs’ Q1 results blew away every prediction. Earnings were up 62% on the same quarter in 2005; there was massive growth in just about every area of its business, but it was in the triple digits for fixed income, currencies and commodities (FICC, 102%), debt underwriting (129%) and equities trading (167%).
In 80 years the world’s financial markets and the corporate landscape have been transformed out of all recognition. Somewhere along the way Eurobonds, financial futures, securitisation and derivatives were all invented. But by whom? Geraldine Lambe tracked down some of the great innovators of the past few decades and talked to them about the times when long-dated floating rate notes were regarded as dangerous products, the futures business meant pork bellies and orange juice, and a $1m fee was considered outrageous.
Despite a meteoric rise to global powerhouse, the RBS board has managed to transform itself from darling to demon in the eyes of its shareholders. Geraldine Lambe charts the bank’s fall from grace.When is an excellent management team not an excellent management team? When your shareholders don’t believe it. Such is the case with Royal Bank of Scotland (RBS) shareholders, and their jaundiced view was amply displayed when chief executive Sir Fred Goodwin was asked if he was a megalomaniac at August’s half-year results conference. Where once they lauded Sir Fred as emperor in all his finery, now shareholders behave as if he has no clothes.
Others may doubt that HSBC can punch its weight in investment banking, but the heads of HSBC Securities USA and Global Markets, Americas, tell Geraldine Lambe that HSBC is a work in progress.In the past year, HSBC has moved from 14th place in the US investment grade debt capital markets (DCM) league tables to number nine.
Investment bankers at UBS have much to smile about, but there is still room for growth, particularly in European M&A and private equity-related business. Robert Gillespie talks to Geraldine Lambe.Exuberance is a common commodity at UBS. At the investment bank, high spirits reflect the fact that mandates that would have been unthinkable only three or four years ago are no longer surprising.