Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among the only top banks in the world that aren’t reducing capacity, Goldman Sachs President Gary Cohn said.
“You’re seeing big international banks, outside of ourselves and JPMorgan, really taking a pretty substantial step back from the markets, and we hadn’t seen that in the entire history of banking,” Cohn, 52, told journalists today at Goldman Sachs’s office in Sao Paulo.
Cohn cited plans by Zurich-based UBS AG and Credit Suisse Group AG to cut risk-weighted assets, reduce balance sheets and withdraw from certain markets and regions after suffering losses during the credit crisis. Deutsche Bank AG plans to reduce balance-sheet leverage as well, and London-based Barclays Plc is facing restrictions from the U.K. government, he said.
“The only capacity we’ve ever seen taken out of banks is banks merging with each other over the last 50 years,” Cohn said. “Now we are actually seeing banks withdraw from investment banking and the capital-markets business.”
While competition from major international institutions is easing, New York-based Goldman Sachs is confronting stronger local banks in regions including Brazil, Singapore, Japan and Hong Kong, Cohn said. Goldman Sachs faces the strongest local competitors in Brazil, Cohn said.
Local rivals in France, Spain, Italy and Portugal have gone “completely the other way,” Cohn said.
In the past, French corporations that wanted to borrow 500 million euros ($643 million) could call BNP Paribas SA or Societe Generale SA and get the loan without a problem, Cohn said.
“Today there’s not a bank in France that would do that,” he said. “So they have to call ourselves and do a public debt issuance.”
Cohn said Goldman Sachs plans to boost hiring in Brazil and increase investment-banking coverage of companies there to 300 from 200. Hiring plans include at least 50 additional people in Brazil this year, mostly in private-wealth management and bankers with knowledge of local states.
Goldman Sachs just moved to a new office in Sao Paulo and has “well over” 300 full-time workers in the country, he said.
The firm doubled equity capital in the Brazil unit last year to $400 million, according to Cohn. The wealth-management business in the country has $1 billion under management, he said.
Goldman Sachs, which doesn’t disclose Brazil revenue or profit, said last month that Fabio Bicudo and Antonio Pereira would become co-heads of investment banking for the country after Daniel Wainstein retired.