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By Pamela Barbaglia and Sinead Cruise
LONDON (Reuters) – Goldman Sachs (NYSE:) named top trader Michael Daffey as global markets chairman on Monday, with a remit to strengthen key client relationships as the Wall Street giant tries to remodel its trading business in Europe after Brexit.
In the newly-created role Daffey, who is global co-chief operating officer of Goldman’s equities franchise, will establish his presence as a “trusted adviser” for some of Goldman’s biggest clients, particularly in Europe.
“We’re taking one of our most senior executives and giving him a license to advise our key clients,” Goldman’s president and chief operating officer John Waldron told Reuters.
“It will allow us to operate at a higher level as we want to deepen our client relationships in places like Germany, Italy, Spain and all across Europe.”
Daffey, a 26-year veteran of Goldman, will also be tasked with helping safeguard the markets business from disruption expected when the Brexit transition period ends on Dec. 31.
The 53-year-old Australian will oversee the implementation of Goldman’s new post-Brexit structure out of London.
The appointment – announced in a memo sent by Goldman CEO David Solomon, CFO Stephen Scherr and Waldron – comes as markets recoil in the face of the coronavirus outbreak, which has left 2020 economic growth forecasts in tatters.
Under Solomon, Goldman has shifted its focus from its money-spinning trading business to building a bigger consumer bank to shield its revenue from swings in financial markets.
Trading makes up roughly 40% of Goldman’s revenues but margins are shrinking in the face of tougher competition and a sustained shift toward passive investing.
Net revenue at Goldman’s global markets business was up 2% last year to $14.78 billion, split equally between equities and fixed income, currency and commodities (FICC).
Goldman competes head to head with Morgan Stanley (N:) and JPMorgan (N:), with Refinitiv data showing Morgan Stanley tops the league tables for global equity and equity-related products so far this year.
Brexit poses further challenges for global banks, with EU authorities still not decided on whether the likes of Goldman can trade EU stocks and bonds outside the bloc.
“We want to serve our clients better and more effectively after the end of the transition period in Britain,” Waldron said.
Since Britain’s 2016 vote to leave the EU, Goldman has beefed up its European outposts, particularly in Frankfurt, which serves as its EU trading hub. It recently poached Sara Woerner from Morgan Stanley to lead equity execution for Germany and Austria.
Daffey will help Goldman “plan for further changes” during the transition period, the memo said, as top rainmakers and traders are expected to be more scattered across the continent.
‘ONE GOLDMAN’
Waldron said Daffey’s promotion is part of the bank’s “One Goldman” strategy, in which senior leaders from all parts of the bank work closely to address clients’ priorities.
This approach – outlined by Solomon at an investor day in January – seeks to end the siloed trader versus dealmaker structure that prevailed under former boss Lloyd Blankfein.
Daffey has built his career in the trading division, rising to top roles including running equities sales globally as well as fixed income and foreign exchange sales for Europe, Middle East and Africa.
His promotion adds another layer to the markets leadership structure where a trio of senior executives – Ashok Varadhan, Marc Nachmann and Jim Esposito – are splitting responsibilities as global co-heads of the securities business.
Waldron said the power-sharing structure in markets will stay, calling Daffey’s appointment a “long-term investment.”
“This is not about expanding our footprint. The goal is to improve the quality of our relationships and services,” he said.
