Goldman Sachs Group Inc. (GS) lost at least nine managing directors in Brazil this year as revenue from investment banking falls and trading and wealth-management fees increase, four people familiar with the matter said.
Jason Mollin, head of Latin American equity research, is leaving the New York-based firm, the people said, asking not to be identified because the decision isn’t public. Already departed are Rodrigo Mello from the investment-banking division, Sylvio Castro, chief investment officer at the private-banking business, and Eduardo Adriano Koelle from wealth management, the people said.
The four executives join five others who left earlier this year as the New-York based bank halted its growth plans in Brazil when the economy expanded less than analysts estimated and merger growth stalled. About a quarter of Goldman Sachs’s roughly 45-person Brazil investment-banking division have departed, the people said.
“Our headcount in Brazil is going to be steady at around 300 people, though it may go up 5 percent or down 5 percent,” Stephen Scherr, Goldman Sachs’s chief for Latin America and global head of the investment bank’s financing group, said in an interview in New York. “The composition of the people is going to change -- and that is by design,” Scherr said, declining to comment on specific departures.
Mello and Castro also declined to comment, while Koelle and Mollin didn’t returned calls and e-mails seeking comment.
Goldman Sachs ranks 13th in Brazil equity underwriting this year, down from the sixth for all of 2012, according to data compiled by Bloomberg. Total equity sales grew to $12.8 billion from $8.2 billion, the data show. Brazil’s gross domestic product expanded 0.9 percent last year, the lowest since 2009, and this year GDP is expected to grow 2.48 percent, according to market forecasts reported by the central bank.
“The Brazilian economy is changing and the business we need to do in Brazil changes, but the real relevant fact for me is that our global franchise plugs into Brazil,” Scherr said. “We have 33,000 people worldwide and, at any given time, many of them are working on transactions related to Brazil.”
Scherr said Goldman Sachs’s sales and trading business tends to do better in periods of volatility and assets under management in the private wealth-management business “tend to go up pretty dramatically in such an environment.”
Brazil merger-and-acquisition deals increased 4 percent to $59.9 billion so far this year compared with the same period of 2012, according to data compiled by Bloomberg. Goldman Sachs ranks eighth among merger advisers, with $5.3 billion in deals. That was down from No. 6 last year, when the firm advised on $14.9 billion of transactions.
“A down market is a good market to manage your people to get the best team,” Scherr said. “You’re not going to miss a lot of business when you ask someone to step away from a role, and your ability to attract talent to replace that person, while always taking longer than you wanted, happens at a less overheated compensation level.”
Goldman Sachs allocated 41 percent of revenue for compensation in the first nine months of this year, the lowest figure for the period in the firm’s history as a public company.
Goldman Sachs President Gary Cohn said in an interview in April that the bank would hire 50 people this year in Brazil. Cohn said the company would also increase investment-banking coverage of companies there to 300 from 200.
“While overall headcount will remain modestly down from the beginning of the year, we continue to work with executive search firms to identify top talent in Brazil for key seats across the business,” Michael DuVally, a spokesman from Goldman Sachs, said in August.
The bank is also subleasing one of the four floors of a Sao Paulo office building it moved into in April, DuVally said.
Goldman Sachs, which doesn’t disclose Brazil revenue or profit, said in March that Fabio Bicudo and Antonio Pereira would become co-heads of investment banking for the country after Daniel Wainstein, one of only two Goldman Sachs partners who are Brazilian, had left. Wainstein was also on the executive committee.
Cassius Leal, managing director and head of equity derivatives trading, also departed as did his team, the people said. Santiago Rubin, a managing director in investment banking, was transfered to New York, two of the people said.
Executive committee members who left were Adriano Piccinin, managing director and head of fixed income; Roberto Belchior, managing director and head of the legal department; and Gabriella Antici, managing director, chief investment officer and head of international asset management, the people said. Belchior is now legal director for BM&FBovespa SA. (BVMF3)
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