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Which is the real Goldman Sachs?

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Goldman Sachs has risen to pre-eminence as a global securities house. It is a convincing first in Euromoney’s ranking this month of the world's best investment banks. But the US firm has two faces. For its clients it is the vigilant, attentive, even enthralling provider of first-class services. For its rivals it has other qualities: it is a mean and aggressive raptor of deals; its competitors feel under threat; it gives bonds too quickly to its secondary traders. Which picture is the right one, and what is the secret of Goldman's much-envied success?

“Goldman Sachs is a firm with a split personality,” says a senior Wall Street banker. “The side which the clients see is the smooth, polished Goldman, the bluest of blue-chip firms. What they never seem to see, but we often do, is the firm's other side, which is aggressive, pushy and downright unpleasant to work with.”

Goldman is the last private partnership among the world's leading investment banks. It is also the most consistently successful, or profitable, firm on Wall Street. In the late 1980s, while other large brokers recorded losses, Goldman earned about $500 million a year. By 1991, its annual earnings stretched to over $1 billion. And this year, who knows? Some recently departed staff estimate over $1.5 billion, others, even more.

The firm's glory has been built on two great strengths in the US: long-lasting corporate client relationships and powerful distribution among institutional investors, particularly in equities. To these has been added an increasingly powerful presence in the international bond and equity markets.

Goldman has pursued a bold policy for the 1990s of expanding on many fronts, into new businesses such as foreign exchange and asset management, and fresh markets in Europe, Asia and Latin America.

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Peter Lee is Editorial Director. He joined Euromoney straight from Oxford University in 1985, and has written about banking and capital markets ever since, being appointed editor in 1999. He became editorial director of Euromoney in May 2005.
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