THE INVESTMENT banking downturn does not look like coming to an end any time soon, Goldman Sachs boss Lloyd Blankfein warned last night, ahead of the bank today trimming partner numbers to save costs.
“Sometimes cycles can last a very long time,” he told a banking conference, according to Bloomberg. But Blankfein also warned the industry against cutting too many jobs, arguing that in the past banks have succumbed to the temptation to hire excessively at the top of booms and cut back too deeply in the trough.
Roughly 70 partners are expected to be appointed today, down from 110 in the last round of promotions two years ago. It follows a week-long process of “cross-ruffing”, an intense vetting system where staff’s performance is analysed and their colleagues interviewed.
The biennial round of appointments determines who gets an extra stake in the profits the bank makes, and harks back to an age when banks’ partners owned the firm entirely, rather than external shareholders.
Between 15 and 20 per cent of partners leave the firm between each round of appointments, often leaving to retire or take senior roles in institutions like hedge funds.
But although those departing are usually replaced, not all of those positions will be filled this year, thanks to the sustained tough market conditions putting pressure on banks to cut costs.