Goldman To Merge Credit, Equity

Goldman Sachs is planning to merge its corporate bond and credit derivative sales, trading and research business with its equity counterparts under the same roof this summer, in a push to pool knowledge across asset classes, according to firm officials. "We're looking at the same dynamics on a single name. Why not have the most informed thoughts sitting in the same place?" said one official. "Due to the convergence of asset classes in the market, it makes sense to have credit professionals in the same location," explained another, referring to the increasing popularity of investing across asset classes and capital structure arbitrage plays.

To be sure, Goldman is not the first firm to merge its equity and credit businesses. Deutsche Bank, for one, merged its equity and debt sales and trading units last September and subsequently reorganized its research unit in December.

As for Goldman, its combined business will be located at One New York Plaza, which currently houses the equity teams. A firm official stressed the strategy is aimed at increasing efficiency and is not intended to cut costs through firings. The staffer noted the firm made a similar move in London which did not result in layoffs. No concrete date for the move is set as of yet, she said.

London credit and equity research teams were integrated into a non-publishing fundamental strategies team run by Sandy Rattray, managing director (BW, 2/28). Yet in the U.S., stock and bond research teams will continue to operate independently even after they are housed under one roof because of the different regulatory environments for equity and fixed-income research, according to a Goldman official.