Goldman Sachs bankers give evidence on BHS

FN Montage

Wednesday’s session in Parliament is part of a wide ranging enquiry into the circumstances of the sale, and is an effort to get to the heart of the advice the US bank gave to Green. The Goldman bankers appearing this morning are Michael Sherwood, vice-chairman, Anthony Gutman, co-head of Emea investment banking services, and M&A banker Michael Casey.

Here’s What You Need to Know:

• In a testimony in May, Goldman Sachs banker Anthony Gutman told MPs that the bank declined to be a formal adviser on the deal due to its small size, but did offer “informal advice” to a long-standing client. Gutman said Goldman Sachs had warned Philip Green’s Arcadia that there were several potential issues with Chappell’s proposal to buy BHS.

• However in a later testimony, Green described the US bank as his “gatekeeper”, and repeatedly emphasised the importance of the advice Goldman Sachs gave.

• Green said that he did not want to meet Chappell until after he was “cleared” by Goldman Sachs as a suitable buyer.

• In testimony Wednesday, MPs heard for the first time that Sir Philip Green approached Goldman Sachs about offering Dominic Chappell’s Retail Acquisition a £40 million loan to finance its acquisition of BHS. Goldman Sachs submitted a letter to the Treasury and Work and Pensions Select Committee on Monday detailing Green’s request, having previously failed to disclose it to MPs.

Michael Sherwood apologised for failing to offer it to MPs previously, and said it was “a request that went away almost before it arrived.”

Iain Wright MP asked Sherwood: “How can clients trust you…when you failed to remember a potential 40 million transaction?”

• Sherwood admits that Goldman Sachs’s reputation has not been enhanced by the bank’s involvement on the sale of BHS. He said the bank has been reviewing its relationship with Sir Philip Green and would decide whether to work with him in the future based on the nature of transaction.

• Sherwood said that Goldman Sachs first worked with Philip Green on his 2004 bid for M&S, but that the bank had done no substantial investment banking work for Green since. Sherwood said that the total fees generated from business with Green have been “very small”, but the bank kept up a relation with the mogul so it could be “in the goalmouth” when a deal did come. Sherwood said the bank then declined to work formally on the BHS bid: “We thought it was too small.’ MPs accused the bank of being “half in and half out” on the deal.

• Sherwood was asked to reassure MPs Goldman Sachs didn’t get involved because it was too small, not because it “stank.” Richard Fuller accused the bank of a “dereliction of duty” for advising on the deal without having full knowledge of the deal’s finances and term sheet, a charge Gutman rebutted.

• Sherwood admitted that Goldman Sachs’s reputation has not been enhanced by the bank’s involvement on the sale of BHS. He said the bank has been reviewing its relationship with Sir Philip Green and would decide whether to work with him in the future based on the nature of transaction.

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