Goldman Sachs Group Inc., seeking a rebound in its commodities business after a bout of losing trades dented earnings, has a plan built around hiring fresh stars and luring new clients.
The bank will bring in a few high-profile commodities salesmen as well as some traders, an acknowledgment that the roughly 180-person unit’s performance has suffered in recent years from failures to replace senior talent as it cut costs, people familiar with the strategy said. The firm also is enlisting its top rainmakers to pitch corporate clients in the energy, power, and metals and mining industries, said the people, who asked not to be identified because the firm hasn’t publicly discussed the plan.
The effort has yet to take hold, and the commodities division struggled in the first few weeks of the current quarter, according to a person familiar with the matter. The unit’s performance has been under review for months, during which it posted the worst quarter in 73 periods as a public company.
Long one of the biggest commodity traders on Wall Street, Goldman Sachs stood out in recent years for sticking with the business while competitors including JPMorgan Chase & Co. and Morgan Stanley scaled back.
Chief Financial Officer Marty Chavez said last month that the poor performance in commodities resulted from the “market backdrop” and lower client activity. He acknowledged that the firm “didn’t navigate the market as well as we aspired to or as well as we have in the past.” Chavez, along with Chief Executive Officer Lloyd Blankfein and co-president Harvey Schwartz, rose from the commodities unit to lead the company.