Joining a growing chorus of criticism, one of Europe's largest asset managers lashed out at Goldman Sachs Group Inc for not communicating quickly enough with clients after ex-banker Greg Smith publicly condemned the way the bank treats clients.
APG, a Dutch investment adviser that runs 300 billion euros of assets for more than 4.5 million people in the Netherlands, said it was surprised it took the Wall Street bank more than a day to offer APG any reassurance on points raised in Greg Smith's resignation letter.
"We would have expected that a company that faces such a big media backlash over something so core to their business such as client trust would have instantly reached out to those clients to say something," APG spokesman Harmen Geers told Reuters. Smith's scathing remarks, published in the New York Times on Wednesday, have prompted an outpouring of criticism, ridicule - and defense - of Goldman, the storied Wall Street firm that has become a lightning rod for anti-bank sentiment.
After the piece appeared, Goldman Chief Executive Lloyd Blankfein and Chief Operating Officer Gary Cohn issued a memo to staff describing the views and observations of the former vice president as "foreign" to most of his 12,000 peers. Blankfein also sent Goldman Sachs employees a voicemail on Wednesday urging them to reach out to clients and saying they had support from CEOs all over the world, a person familiar with the situation said.
On the voicemail, Blankfein read out two examples of support from clients, the source added. Geers said the bank contacted APG late on Thursday offering a copy of the staff memo and telephone explanation of its message, a gesture he described as "too little, too late."
Goldman Sachs made no immediate comment when asked how it was communicating with clients. While the criticism has sparked numerous "me too" responses, at least one client using Goldman's investment banking advisory services said it respected the firm's knowledge and experience.
"We've had a love-hate relationship with Goldman for a number of years," United Technologies Corp Chief Financial Officer Greg Hayes told reporters in New York on Thursday. "For us it's about what these banks bring to the table. I think Goldman has the intellectual capital, they've got the know-how to do these transactions. There's other banks out there, but Goldman is still the pre-eminent investment bank and they give solid advice."
The diversified US manufacturer has hired Goldman to sell some of the industrial units of its Hamilton Sundstrand arm. Hayes said Smith's resignation letter would not change his opinion of the firm. "There's bad apples and there's bad actors at every one of these companies. Banks have a bad reputation anyway," Hayes said. "But I think Goldman can add value."
Yet, Goldman recently drew criticism from a prominent Delaware judge for serving as both an adviser to and beneficiary of El Paso Corp's $23 billion sale to Kinder Morgan. And among investment managers, faith in Goldman's reputation appeared more tattered.
"One of the more important messages (Smith) gave was the need for the bank to refocus attention on clients and attend more closely to their needs ... but even now, Goldman, as well as some media, seem to be overlooking that," Geers of APG said. The lack of quick, direct communication with APG underlined how much work Goldman needs to do to prove it puts its customers first, the Dutch group said.
"I have seen the internal memo from Goldman to its employees which says 'we all know this isn't true,' but perception is reality and a service provider lives or dies by whether they have happy clients," Geers said. "What about trying to re-win trust?" he said. "Goldman's clients are now being forced to explain to their clients why they are doing business with Goldman. We are now obliged to answer questions because of their company culture. From the bank's point of view, that is very bad."
Goldman has bounced back from several dents to its image in recent years, but industry insiders say the unprecedented attack from a former employee could start to push much larger volumes of prospective business to rivals. And it stirred a wide range of reactions. Jamie Dimon, CEO of rival bank J.P. Morgan Chase & Co, cautioned employees against trying to "seek advantage from a competitor's alleged issues."
Comments
Comments are closed.