Goldman Sachs (GS) is in trouble, and it’s not just because of questionable remarks by its executives.
CNBC reporter Charlie Gasparino notes that despite big gains from its trading business, the venerable financial titan is getting beat in a critical Wall Street growth area: stock underwriting.
Daily Beast: Goldman’s deal-making machine faces mounting competition from megabank J.P. Morgan, and now from Morgan Stanley, which had been losing ground, but is now, like J.P. Morgan, challenging Goldman in the business of underwriting stocks for major companies, according to the latest “league-table” statistics from a company called Dealogic that tracks such activity.
Gasparino says that such deals are important because banks have been issuing stock in massive numbers to repair toxic-debt-ridden balance sheets and to repay government bailout money. Plus, M&A and IPO activity has been weak.
Of course, Goldman is making a lot of money this year, but its lucrative trading business is underwritten by temporarily cheap money from the Federal Reserve and its tarnished reputation means the bank isn’t seen as an important player in every deal like before.
Read the whole thing here.