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Treasury & Capital Markets
Not all investment banking co-heads equal
Mark Sorrell, Gonzalo García’s exclusion from GS committee sets industry talking
Keith Mullin 26 Feb 2024

If it wasn’t already obvious to Mark Sorrell and Gonzalo García – respectively Goldman Sachs (GS)’s London-based co-heads of global mergers and acquisitions, as well as, Europe, Middle East and Africa investment banking (IB) – that co-heads in the IB stratosphere aren’t built around some twisted Marxian ideal of equality for the uber-privileged, they just found out the hard way.

The story that’s doing the rounds about them throwing their toys out of the pram and threatening to quit because they weren’t appointed to the bank’s new IB committee, when their respective co-heads (Stephan Feldgoise and Anthony Gutman) apparently were, is an odd one. For IB watchers, people stories are fascinating because the fortunes of investment banks are tied as much to the motivations and actions of their principal assets – their people – as they are to the economic, business, monetary, fiscal and political cycles that drive underlying business flow.

As a story of two extremely rich investment bankers at the apex of the industry, doubtless with big egos, feeling slighted and whingeing to the media, it’s impossible to feel much sympathy for them. Quite the contrary, in fact. But at another level, they have a point because the IB and global markets committees being established will sit under the 25-strong firm-wide management committee, which in turn sits under the eight-strong executive leadership team so they will have some stature as a springboard for the firm’s future leaders.

As president and COO John Waldron moves ever closer to taking over from David Solomon as chairman and CEO, there’s a lot at stake particularly for those circling the upper ranks of the IB and global markets division that accounted for 65% of firm-wide net revenues in 2023.

But the line thrown to the media that Sorrell and García are threatening to quit is weird because it’s hard to know where they’re going with that. If they felt so aggrieved, rather than going to the media as some sort of ploy to achieve who knows what, shouldn’t they just have quit?

Thinking the story out, being asked to join the IB committee post hoc after creating so much media attention, with the inference that their threats to quit were received with some sort of corporate alarm is presumably a non-starter. That could be seen as undermining the credibility of the co-heads of the global banking and markets division responsible for establishing the committees. The decision to appoint individuals would presumably not have been made without thinking through any consequences. It might in fact have been made to send a clear message to those not appointed.

I haven’t seen the list of IB committee members but, according to media reports, as well as Feldgoise and Gutman, it includes a senior tech banker, a healthcare banker and a private equity product specialist. Beth Hammack, co-head of the global financing group, was also named. No place, it would appear, for anyone from equity capital markets, a marquee product line at GS or, from what I read, from real estate. It would appear the IB committee is not built purely on title seniority alone.

It’s worth pointing out that Hammack also sits on the more senior management committee but Vivek Bantwal, the other co-head of the global financing group, does not. That’s another demonstration that co-heads are not created equal. It emerged last week, of course, that Hammack is leaving GS after more than 30 years at the firm. A former global treasurer of the firm who rose up through the ranks of the fixed-income trading division, Hammack had reportedly been tipped to take over as CFO. Denis Coleman took over that position in January 2022, and Hammack was moved from her role as treasurer to take Coleman’s vacated position as co-head of the global financing group. I’m not going to try to unpick that one.

Co-heads as standard

The IB industry has a long history of co-head positions across its divisions. They’re handed out for all manner of reasons – to achieve geographical balance; to balance out skill-sets (banking versus trading); to drive competitive tension and achieve better performance; to tone down over-inflated egos (plenty of those in investment banking); slightly more cynically, to set individuals against each other to let them battle it out for supremacy; or to create a protective bubble around the boss by keeping any skulduggery and politicking a layer below.

When GS merged investment banking and global markets in 2022, it appointed three co-heads: two from IB (Jim Esposito and Dan Dees) and one from global markets (Ashok Varadhan). I doubt all aspects of their GS existence were identical. Marc Nachmann, the other co-head of global markets alongside Varadhan and a former co-head of the IB division, was shunted to run asset and wealth management. Esposito, former co-head of the IB division also served as a co-head of securities division. Esposito also announced his departure from GS in January after 28 years. Let’s see if they run another co-head up the pole of the IB and global markets division.

As a final comment, you could argue that the very fact that the firm has decided to set up discrete operating committees for IB and global markets after merging the two businesses is odd in itself. But that’s a story for another day.

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