In October 2011, things were looking bleak at Goldman Sachs’s commodities business. Revenue was down, competition was up, employee attrition was at an all-time high and new regulations were on the horizon.
Bloomberg News reports that beyond the usual rivalries with Morgan Stanley and JPMorgan, Goldman Sachs executives saw an upstart doing deals they couldn’t do and throwing lots of cash at traders: Glencore.
The commodities company wasn’t tied down by rules that applied to banks and had become even more of a presence since a $10bn initial public offering earlier that year. It boasted strong growth and higher stock multiples than Goldman Sachs was receiving for its commodities unit.
'Glencore competes with GS Commodities but has a broader business mix, including significant production, refining, storing and transport activities', Goldman Sachs executives said in a presentation that month to the bank’s board later made public by the Senate Permanent Subcommittee on Investigations. 'May be model for evolution of commodities trading'.
Four years later, that envious assessment is looking wrong, and Goldman Sachs executives are probably breathing a sigh of relief.
To access the complete Bloomberg News article hit the link below: