Morning Coffee: Goldman Sachs’ quiet and thoughtful top banker is back. London’s old fashioned rainmaker is a $6bn man

You can’t keep a good man down, it seems. John Waldron, the President and Chief Operating Officer of Goldman Sachs (famous for his thoughtful demeanour and large family), has been appointed to the company’s board of directors. Only a year ago, it seemed like he was on the outs, having threatened to leave and lost his key operating committee as a result.  But now he’s once more being talked about as the front runner to succeed David Solomon.

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That might mean a few forced smiles from Dan Dees and Ashok Vadharan, the co-heads of Global Banking and Markets, and from asset management head Marc Nachmann. They are the other names that usually come up in the context of Goldman’s succession planning. And they’re all only a few years younger than Waldron, who is 55 years old. Which means that if he gets it, they will probably have missed the chance, as the next CEO after that is more likely to come from the next generation.

Of course, a lot can change in a few years in banking, and David Solomon hasn’t actually said that he’s planning to go anywhere any time soon. And although a seat on the main board is clearly a prestigious promotion, it’s by no means a guaranteed stepping stone to the top job – Gary Cohn was previously in the same position (President, COO and board member), and he left to be director of the National Economic Council in the first Trump administration, without ever really having got close to being CEO.

In many ways, it’s exactly because Solomon isn’t triggering any succession battle that Goldman is having to hand out incentives to its top bankers. He is 63 years old, and so might carry on into the 2030s if he stays on as long as Jamie Dimon, which is quite a long time to wait for ambitious bankers who are always being offered attractive jobs elsewhere. Having lost Jim “Espo” Esposito to Citadel and Beth Hammack to the Federal Reserve, Goldman might have decided that they were running short on well-liked internal candidates.

And in fact, Waldron might make a lot of sense in the sort of role that Dan Pinto used to have at JP Morgan; the “just in case” succession candidate for the duration of Solomon’s tenure, but not necessarily the one that’s going to take over.  If you want a close substitute for D-Sol, it’s hard to think of a better one; the two men have always been close since their days working together at Bear Stearns. But why would you want a substitute if you have the real thing? And when the Solomon era finally comes to an end, Goldman might decide that it needs a change of direction, rather than more of the same.

Which means that it’s not actually a done deal that John Waldron will ever be in charge of Goldman Sachs. But why would he want to be?  At present, he’s paid almost as much as David Solomon, he’s got a seat on the board and he’s got as much influence as he needs. It’s almost all the good things about being CEO, without people criticising you in newspapers all the time.

Elsewhere, fund management firms have learned through bitter experience that it’s best to emphasise their process, systems and methodologies rather than the individual talent of their stock pickers. For one thing, it sounds more scientific and professional, but more importantly, reputations for financial genius tend to attach to people, not companies. And people have a habit of leaving you.

Jupiter, for example, had an episode of old fashioned key person risk last year. Ben Whitmore, the head of strategy and value equities, decided to leave and set up his own boutique (it’s called Brickwood Asset Management). Over the next 12 months, more than £6bn was taken out of strategies managed by Whitmore and his team.

That money hasn’t all gone to Brickwood (in fact hardly any of it has – they only just launched). But it must be a nice boost to the ego to at least know that, surprisingly rarely for the financial industry, people missed you when you left.

Meanwhile…

No amount of junior analyst time is going to “pls fix” this story of a private equity deal gone extremely bad, in which the star player seems to be some (in retrospect) very questionable decisions about what should or shouldn’t go into EBITDA. (Bloomberg)

Damned if you do and dratted if you don’t – American firms are trying to de-emphasise their ESG credentials to avoid attracting unwanted political attention, a process apparently known as “greenbrushing”. But overseas clients still want the stewardship service – State Street has just lost a very big UK pension fund for this reason. (FT)

The CFTC has updated its “self-reporting” arrangements, to give companies which admit their misdeeds a much bigger reduction in their fines and penalties. Since its individual whistleblower program is really not very generous compared to the SEC’s (and indeed was nearly wiped out by one Deutsche Bank snitch a few years ago), you might be better off going to your boss and volunteering to split the payoff. (WSJ)

Another departure from BlueCrest – Grant Oliver, who built the systematic execution platform there, has gone to be deputy head of client services at Celoxica, a high-speed trading and risk management fintech. (Financial News)

How woke is Blackrock? Not as woke as it used to be. Here’s an investigative timeline of how one of the pioneers of having a deep commitment to diversity, equality and inclusion started to tone it down a bit when it became embarrassing and inconvenient. (Business Insider)

Like kids asking for ice-cream, any Blackstone portfolio companies which want to hire McKinsey & Co to improve their efficiency are going to be told “we have McKinsey at home”. Rodney Zemmel has been hired as their “global head of portfolio operations”, after narrowly losing out to Bob Sternfels in the last race to be Senior Partner. (Bloomberg)

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