Goldman takes on banks

Investment banker Goldman Sachs Group’s dash for post-pandemic profits in South Africa is putting it on a collision course with the country’s biggest banks. Already a top trader of SA government bonds, Goldman is ramping up financing in the country, muscling into an area dominated by local lenders such as Standard Bank and FirstRand.

In anticipation that South Africa will fast recover from its deepest recession in a century, Goldman is moving to a larger office in Johannesburg and plans to add a handful of hires to the 30 staffers it currently has, Jonathan Penkin, the Wall Street firm’s head of sub-Saharan Africa, said in an interview.

“If you look at risk management and FX [foreign exchange] in South Africa, the wallet of the top five banks has over a billion dollars,” Penkin said. “Of course, they have much broader franchises, but we want to be able to break into a part of that.”

As Goldman embarks on a hiring spree in major emerging economies like China, it’s also expanding its footprint in South Africa, adding fixed-income and foreign exchange products aimed at corporate and institutional investors to its existing investment banking services.

The US bank is making further inroads after committing to an expansion drive about two years ago.

At a time when several other foreign firms, including Deutsche Bank and Credit Suisse Group, scaled back operations, Goldman boosted its markets offering and added licences to build out its business.

“Finance and risk management – combining our new brokerage in South Africa together with the advisory side and providing financing and risk-management solutions to corporates – is where we see very significant growth,” Penkin said.