Goldman Sachs Group Inc., the U.S. bank most reliant on trading, named Ashok Varadhan as the third co-head of that division.
Varadhan, the 41-year-old chief of macro trading, joins Pablo Salame and Isabelle Ealet in running the securities division, according to an internal memo obtained today by Bloomberg News. Michael DuVally, a spokesman for the New York-based firm, confirmed the memo’s contents.
Varadhan will help run the business that generates the most revenue and profit among Goldman Sachs’s segments and that has produced many of its top officers. He takes over as the trading unit faces constraints from new capital rules and has seen declines in revenue in three of the past four years.
He joined Goldman Sachs in swap trading in 1998, and was named a partner at age 30 four years later. He was chosen to run North American interest-rate products in 2001 and became head of foreign exchange in 2007.
“As a long-tenured leader in the securities division, Ashok has demonstrated dedication to our clients and a deep understanding of our business,” Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn wrote in the memo.
Goldman Sachs generated $15.7 billion in revenue from equity and fixed-income trading in 2013, down 13 percent from a year earlier. While it set a Wall Street record for trading revenue in 2009 as other firms took longer to recover from the financial crisis, Goldman Sachs has been passed by fixed-income giants JPMorgan Chase & Co. and Citigroup Inc.
Macro trading, which includes interest-rates and currency trading, probably contributed to the decline in 2013. Rates trading at the 10 largest global investment banks fell 40 percent in the first nine months of 2013, according to industry analytics firm Coalition Ltd. Goldman Sachs said its currency business had “difficulty managing inventory” in the third third quarter as the firm posted its worst fixed-income trading revenue since the credit crisis.
The firm still generated the most revenue from equities trading and has pointed to its return-on-equity, the highest among the world’s biggest investment banks last year, as a sign of its outperformance as industrywide revenue has slumped. ROE is a measure of how well a company reinvests profit to generate additional earnings.
Varadhan joins Salame, 48, who started in emerging market currency trading and has helped run units including credit derivatives and equities, and Ealet, 51, who headed the firm’s commodities business before her promotion.
The securities division co-head position has produced Cohn and Chief Financial Officer Harvey M. Schwartz, 49, as well as Vice Chairman Michael Sherwood, 48. Goldman Sachs has traditionally had multiple people run its biggest unit, with four co-heads splitting the job from 2008 through 2011.
Varadhan is a Duke University graduate who served as a manager of the basketball team during his college years. He is the son of Srinivasa Varadhan, a New York University mathematics professor who was presented with the Abel Prize in 2007 “for his fundamental contributions to probability theory and in particular for creating a unified theory of large deviations.”