Goldman Sachs Full Throttle

Goldman has publicly declared the need to grow their UHNW lending and Asset Management arm by 1000% in the next 12 months.  Is this possible?  Goldman is no stranger to Private Banking and has operated in this space in an extremely efficient and effective way until JP Morgan put both feet forward over the last 5 years.  Why does this matter and will the pack follow them like bulls or lemmings?

Goldman clearly sees the value of predictable loan servicing, cheap capital and asset management . . . not to mention the fee business generated from C-level clients who need advice from a corporate perspective as well.  They are looking for some very safe capital, cheap money and to get back into the Boardrooms of public companies.  There is little doubt that clients will be institutionalized for the purposes of building out an even bigger sales channel for all of Goldman’s offerings.

We are seeing this trend amongst our clients to some degree . . . However, Goldman’s doing it in such a public way that it sends a clear message to the Wirehouse, Boutique Wealth Managers & RIA channel to take a harder look at going after credit – and aggressively at that. 

Great article on Mark Zuckerberg’s 1% mortgage through Morgan Stanley . . . who, of course, handled the IPO.  Seems like everyone is getting on Goldman’s page . . . scott@elevationsearch.com

 

I am lucky my income does not rely on my consistent blogging efforts!  Regardless, we’re having a solid year and clients are absolutely feeling the pressure (internally) to keep looking for new talent, AUM and T12.  More posts coming up – shorter, more fact based and less hyperbole.

We have much travel to Sao Paulo, Lima, Bogota and Miami over the next 6 months and look fwd to some positive and forward thinking meetings – scott@elevationsearch.com

LatAm Wealth Management

February 3, 2012

Interesting to watch the market evolve as some of the blue chip names are strategically taking back seats for the time being.  3 new broker dealers laying down roots and we’re working on different positions for each effort . .  .definitely a forward thinking paradigm – but a true LatAm commitment.

Wirehouses are hiring aggresively and the battle for talent is undeniably under way.  Colombia & Brazil are still the names that perk eyebrows . . . 2012 continues to amaze us all.

Hope all is well – Scott

Morgan Stanley Said to Limit Cash Bonuses

By Michael J. Moore – Jan 16, 2012 9:59 PM ET

Tue Jan 17 02:59:48 GMT 2012

                     

Daniel Acker/Bloomberg

Morgan Stanley (MS), owner of the world’s biggest brokerage, is capping immediate cash bonuses at $125,000 as the firm curtails pay and defers more compensation for senior executives, according to a person briefed on the plans.

Members of the company’s operating committee, led by Chief Executive Officer James Gorman, 53, won’t get any immediate cash, said the person, who declined to be identified because the plan hasn’t been made public. Mark Lake, a spokesman for the New York-based bank, declined to comment.

The decision comes after a fourth quarter that some analysts predicted was the worst for trading and investment-banking revenue since the financial crisis. Increased salaries and previous moves toward deferring more pay have limited investment banks’ flexibility to cut compensation costs, analysts including Atlantic Equities’ Richard Staite have said.

Morgan Stanley’s decision will increase the average amount of pay deferred to about 75 percent, the person said. The firm deferred an average of 60 percent in 2010 and 40 percent in 2009. Deferred cash for 2011 performance will be paid out in two equal installments in the final month of 2012 and 2013, a change from the previous deferral plan that paid out in thirds over 18 months, the person said.

Details about the compensation plan were reported earlier by the Wall Street Journal.

Morgan Stanley’s investment-banking unit set aside $5.74 billion for pay in the first nine months of 2011, an 8 percent increase from a year earlier. Companywide compensation and benefits rose 6 percent to $12.7 billion as revenue climbed 13 percent.

Junior Employees

The amount deferred for junior employees won’t exceed 25 percent of their bonuses, and those who are paid less than $250,000 annually won’t have any cash deferred, the person said. Some of Wall Street’s biggest firms are considering freezing pay levels for some junior bankers, people familiar with the deliberations said earlier this month.

Credit Suisse Group AG (CSGN) is likely to suspend its practice, an industry norm, of boosting pay automatically each year for analysts, associates and vice presidents within the investment-banking division, a person with direct knowledge of the decision said. While those employees will get their regular annual salary increases, bonuses probably will be lowered to keep total pay flat from a year earlier, the person said.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

 

 

 

 

 

Scott B. Witkin

Managing Partner

Elevation Search, LLC

757 Third Avenue, 20th Floor

NY, NY 10017

 

tel. 203-952-9000

 

scott@elevationsearch.com

 

Since 2001

We will be rolling out 3 new areas in addition to our Wealth Management vertical within LatAm Equity Research & Sales January 2012.  Per the above, the areas covered will be:

– Oil & Gas

– Metals & Mining

– Infrastructure

We’ve just spent the last 6 weeks travelling to the region and narrowed down a very large pool of prospects into the areas above.  There are some great things going on in Brazil, Peru and Colombia so we’re planting our feet there. 

By YE 2012 we expect to be present in these countries at least once every 4-6 weeks for client and candidate meetings.  We continue to be NYC based and welcome the opportunity to meet candidates and clients on their travels here.

Happy Holidays

I just sat through a Bradesco sponsored symposium on Brazil and had the pleasure of meeting the CEOs of Vale & Petrobras.  Some highly intelligent people presented compelling ideas on Brazil’s future and why it will continue on its path in a consistent way devoid of bubbles, hyperinflation and social challenges.  There’s no feeling that Brazil’s been seduced by any one neighbor, region, product, service or short-term, commodity driven boom.

One of the most compelling Q&A sessions focused on how higher interest rates will always be able to dampen inflationary fears and thus build more confidence in capex spending and asset building.  Our expectation is that M&A + Private Equity activity will continue to flourish and ultimately result in continued demand for Wealth Management.  Capex spending always fosters PE activity which obviously has a hand in M&A.

As a result, a colleague and I have booked trips to Sao Paulo & Bogota in early December to meet with candidates & clients alike.  This is going to be a regular occurrence for all of 2012 at a minimum.  Bogota offers tremendous opportunity as well and we expect the presence of global banks to double in the next 12-18 months.

scott@elevationsearch.com

Wealth Management Upswing

November 18, 2011

 

Just got back from a 48 hour trip to Miami meeting with candidates & clients. To say the air is filled with advisors LOOKING for change versus wanting to hear about it is an understatement.

Not sure if there’s a common denominator but there are many indicators . . . reduced deferred comp plans, reduced appetite for risk, lack of credit/lending (again) and the #1 issue we heard = too much compliance & time spent on opening new accounts.

There is an absolute certainty amongst FAs that the “trade away” incentive money plans will not look the same in 12+ months and there will continue to be even more restrictive layers of compliance, delayed account openings and even more pass-through risk to the advisors.

We’re thinking that 2012 will represent a year of significant turnover and . . .get ready for this . . . “headline risk” will be a deminimus issue to advisors. The internet has eroded the impact of headline risk to clients and it’s no longer a “top 3” reason to trade away. The UBS Rogue Trader BARELY registered on the radar of our friends at that firm and their competition did not report it was a useful way to win over current clients.

It’s becoming crystallized how the FA is making the relationship stickier versus the institution. People just like to work with people they like . . . seems to be the same ethos from when the cave men (I know it’s not PC and I should say cave-people) decided who they wanted to share a cave with.

We are heading to Sao Paulo and Bogota for the first 2 weeks of December respectively as we continue to build out our M&A, Corporate Finance & Equity Research verticals.

– Scott

scott@elevationsearch.com

FAs & Euro Zone ripples

October 31, 2011

Quick thoughts based on a conversation this weekend with an FA based in NYC with clients throughout the EU and LatAm (nothing original here btw):

1.) As EU stabilizes in general terms and the PIGS are addressed one by one . . . there will be corresponding US Equity Market pops on the good news and drops when the layers of the onion are peeled back. Buy on the drops and buy household names.

2.) Clients are talking about more risk than they have in the past 3+ years and are thinking Q1 will be a good time to pull the trigger.

3.) Clients are focusing on headline risk more than ever. Partially because they’re better educated as well . . . partially because there’s no reason to be wrong anymore due to the options avaialble.

4.) LatAm clients are looking for more stability on commodities pricing before they start their summer vacations in December (inverse seasons of course)

5.) Latam prospects are being extremely cautious about Swiss based banks beacuse of headline risk, scrutiny and perception of “secrecy” even though it’s not univerally merited

Nothing groundbreaking but these are the Top 5 items he wanted to talk about . . . scott@elevationsearch.com

The Witkin Report

October 17, 2011

Many of you (approximately 850+) have been receiving our Quarterly Report for 12+ months . . . We’re formalizing its structure & rebranding it as “The Witkin Report” for the simple reason that it’s easier for us to reference and search for when needed.

We will continue to publish “The Witkin Report”:

– Quarterly via USPS & viewable as a PDF
– Month End email reports highlighting battles won by candidates & clients
– Weekly Blogs focused on current events, headline risk & up-to-the-minute data

Feedback to scott@elevationsearch.com . . .

RBS Cancels Christmas for Investment Bankers

By Gavin Finch – Oct 14, 2011 8:32 AM ET .

RBS reduced its spending on holiday parties to 10 pounds ($16) a head. Photographer: Chris Ratcliffe/Bloomberg.
.
Royal Bank of Scotland Group Plc (RBS) is canceling Christmas for its investment bankers this year as the government-owned lender tries to reduce costs.

The bank will stop subsidizing holiday parties and has banned staff entertainment for the rest of the year, Chris Kyle, chief financial officer of RBS’s investment bank, wrote in an e- mail to employees obtained by Bloomberg News. A spokesman for the lender confirmed the contents of the memo.

RBS reduced its spending on holiday parties to 10 pounds ($16) a head, enough to buy two pints of lager and a packet of potato chips, in 2008 after receiving the biggest banking bailout in the world in the financial crisis. The lender announced 2,000 job cuts at the securities unit in August.

The bank is seeking to “further tighten and minimize the rate of spend on non-staff costs,” Kyle wrote. RBS has also frozen spending on computer hardware, new Blackberries and additional newspaper subscriptions, he said.

“International travel for internal purposes is to cease across all areas” and “travel under four hours duration will be in economy class without exception.”

Employees have also been stopped from organizing off-site meetings and from taking taxis home before 10 p.m., he said. All contractors will take a “mandatory” vacation from Dec. 19 to Dec. 30, Kyle wrote.

The lender may also have to raise capital as European Union regulators force banks to bolster themselves against losses from the region’s sovereign debt crisis.

RBS might need to raise as much as 19 billion euros ($26 billion) of new capital to pass a third round of stress tests, Credit Suisse Group AG analysts led by Carla Antunes-Silva wrote in a note to clients yesterday. Evolution Securities Ltd.’s Ian Gordon said in a note today that RBS has “absolutely no need” to raise more capital because the bank wrote down its holdings of Greek debt by 50 percent in the second quarter.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net