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Last updated: November 14, 2012 8:38 pm
Goldman Sachs has announced its smallest class of new partners since going public more than a decade ago as the investment bank seeks to trim expenses amid lower activity and commissions from its customers.
Goldman appointed just 70 of its managing directors to the partnership, the bank said in a statement on Wednesday. That is 36 per cent fewer than the 110 promoted in 2010, the last time the lender chose new partners.
While the title of “partner” at Goldman is largely ceremonial since the bank ceased to be a true partnership after it sold shares to the public in 1999, it still comes with a significant amount of Wall Street prestige as well as a higher salary.
Goldman selects fresh partners every two years in a labour-intensive process that involves current partners vetting candidates in a process known as “cross-ruffing”. Those that make the cut receive phone calls from Lloyd Blankfein, chief executive, or Gary Cohn, chief operating officer, personally welcoming them into the partnership.
But far fewer of those calls were made on Wednesday morning than in recent years. The announcement should leave the company with about 450 partners at the start of the new year when those named Wednesday officially join the partnership. Goldman had 32,600 employees at the end of September, meaning the small class size announced on Wednesday should give it a partner to total staff ratio of about 1.4 per cent. That is lower than the 1.7 to 1.8 per cent estimated in recent years.
Those chosen this year included Francesco Garzarelli, the bank’s co-head of macro and markets research; Huw Pill, the bank’s chief European economist; and prominent technology analyst Heather Bellini.
Others included Russell Horwitz, Mr Blankfein’s chief of staff; John Kim, head of South Korea investment banking and co-country head; John Mallory, who works in Goldman’s wealth management business; and Kent Clark, from the bank’s asset management group.
Some had speculated that Jack Siewert, the former US Treasury aide and the bank’s new public relations head, could become a partner after joining the bank to replace outgoing PR chief Lucas van Praag. However, insiders at the bank said Mr Siewert’s promotion to partner just months after joining the bank was a “long shot”.
One of the newly named partners, Yann Samuelides, appeared in the British tabloids three years ago. Mr Samuelides was said to have offered a Slovakian escort £500,000 to leave her husband, according to reports of a divorce case in the UK. Mr Samuelides and the woman now live together and have a child.
“It’s a modern day Pretty Woman,” said one person familiar with the matter.
On Tuesday, Mr Blankfein had warned that the financial industry should not go “overboard” in cutting costs in reaction to current market conditions.
The bank itself has shed about 8 per cent of its total staff since June of last year, but has been hiring technology staff as markets move to more automated trading and transactions.
Goldman is aiming to trim $1.9bn in expenses.
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