And talking of Goldman, I have to admit to being surprised at how mediocre its third-quarter earnings were. In mid-October, the firm announced that revenue in fixed income, currency and commodities fell some 45% to $1.25 billion. This was a bigger drop than that experienced by rival flow houses. Goldman’s third-quarter net income was actually flat at $1.4 billion because the firm cut remuneration costs. Revenues fell to $6.7 billion from $8.4 billion a year earlier.
Chief financial officer Harvey Schwartz stated the obvious: "Not a good quarter from us in FICC... it’s just one quarter." More worrying perhaps for market observers is that the bank’s return on equity was a meagre 8.1%, well down from the glorious pre-crash days.
It is counter-intuitive for Goldman to underperform its rivals. And when you add that to the fact that you can’t pick up a newspaper without seeing yet another negative story about JPMorgan – the former acceptable face of finance – it does seem as if the financial landscape might be changing.
Did you see that Michael Evans, global head of growth markets at Goldman, is retiring after 20 years at the firm? Evans has often been talked about as a possible successor to Goldman’s chief, Lloyd Blankfein – particularly during the ‘vampire squid’ era when Lloyd was considered damaged goods. Now it seems as if Blankfein’s pedestal is being repositioned. "Lloyd’s not going anywhere," a mole muttered. Another source hints that Evans’s fall from grace is precisely because he attempted to challenge Blankfein’s supremacy. But now that the fearless leader is feeling more secure, long-lived Lloyd is able to part company with his detractors.
And finally, while I am musing on the acceptable face of finance, I should mention that I recently caught up with Colin Fan, co-head of corporate banking and securities and head of markets at Deutsche Bank.
I am a huge fan of Fan. He comes across as normal and open. In other words, the antithesis of a senior investment banker. Colin is Canadian but was born in China to Chinese parents and consequently has a sanguine perspective on the lumps and bumps one encounters in financial markets. I look forward to seeing more of Colin and wish him and his team well in navigating markets in the final quarter of 2013.