Goldman Sachs spreads banker web beyond New York

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Goldman is shifting partners to Dallas and other locations

Today, banks are casting Dallas and other regional cities as plum assignments.

Goldman Sachs is revamping its network of investment bankers, shifting partners to Dallas, Atlanta and other cities, according to people familiar with the matter. The firm is expected to detail some of these moves in coming days.

The idea is to have bankers better situated to call on companies based far from Wall Street. The move will ease Goldman’s reliance on hyper-specialised, industry-focused bankers in New York, who will now in some cases share responsibility for clients with a senior banker in a regional office, the people said.

An added benefit: The shift could curb spending on banker travel without gutting face time with clients. In fact, the hope is that it will draw those clients tighter into Goldman’s orbit. The risk is that some bankers view such moves as banishment. The moves also suggest more than a tinge of defensiveness by Goldman, given bigger rivals have vast regional networks.

Goldman is framing the shift as a chance for young partners to climb the ladder faster. Outside the hierarchy in New York, bankers will be freer to build the client relationships that can propel careers forward at Goldman.

Matt Gibson, who stepped into a leadership role in Chicago after superstar banker Byron Trott left Goldman in 2009, has garnered attention for his work on big deals, including the merger of Exelon and Pepco.

The push evokes an earlier era at Goldman, when well-known bankers in regional offices cultivated ties to local companies. Many were generalists whose value lay not in knowing a particular industry or financial product but in having woven themselves into the local business scene.

Hank Paulson, who later ran Goldman and went on to become US Treasury secretary, came up in the firm covering Consolidated Foods and other Midwestern companies from the Chicago office.

As the financial industry grew more complex and specialised, the model shifted. So-called “coverage bankers”, largely based in New York and assigned to industries such as health care or energy, took primary responsibility for calling on CEOs.

Goldman has hundreds of these bankers, who are expected to stay close to companies in their sector and, when needed, bring in specialists to arrange mergers or raise debt.

If the firm misses out on a deal, coverage bankers can expect to hear about it from higher-ups. Goldman will now spread that accountability among regional heads, the people said.

Rivals like JP Morgan, Bank of America and Citigroup already use their legion of commercial bankers, who sit in regional offices and help companies manage their day-to-day finances, to stay close to executives and drum up lucrative investment banking business. In some cases, Goldman’s rivals also are ramping up their regional offices.

JP Morgan in 2012 began deploying more bankers in cities such as Atlanta, Houston and Washington, D.C. It now has about 50 investment bankers dedicated to the effort, which is a collaboration between its commercial and investment banking divisions.

Revenue from that venture has more than doubled since 2008 to $ 2.2 billion last year, according to a February bank presentation. The firm has set a goal of $ 3 billion.

Bank of America divides the US into more than 90 regions, each led by an executive tasked with making sure consumer bankers, investment bankers and wealth managers are working together. They also act as the bank’s face to the local community, through philanthropy and engaging with civic leaders.

Goldman, which isn’t a big commercial lender and hasn’t built a nationwide network of branches through acquisitions, lacks a major US banking presence outside New York and San Francisco. Instead it leans on travelling bankers who spend weeks on the road tending to far-flung clients.

Embedding senior bankers in regional offices means more opportunities to rub shoulders with local corporate managers over school functions and charity dinners, the kind of informal ties that can keep Goldman top-of-mind when assignments come up.

It also could deepen the bank’s reach with smaller companies, which JP Morgan and others have closer ties to because of commercial banking relationships.

Dave Eisman, a Goldman partner whose clients include Nike and Petco Animal Supplies, will move to Seattle, people familiar with the plans said. Aasem Khalil, a chemicals specialist who was named a partner last month, will head up the effort in Dallas. A pair of telecoms bankers, Dave Dase and Jason Rowe, will move to Atlanta and Toronto, respectively, the people said.

— Emily Glazer and Christina Rexrode contributed to this article.

Write to Liz Hoffman at liz.hoffman@wsj.com

This article was first published by The Wall Street Journal

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