GS Goldman Sachs Group Inc

By Julie Steinberg in Hong Kong and Liz Hoffman in New York 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 22, 2018).

Goldman Sachs Group Inc. is shaking up its leadership in Asia, where a high-profile corruption scandal has dampened an otherwise strong stretch of deal-making.

Andrea Vella and Kate Richdale, Goldman's investment banking chiefs in the region, are being shifted out of management roles, according to people familiar with the matter. They will be replaced by Todd Leland, an adviser to European banks and asset managers who was tapped last year to help run Goldman's operations in Asia.

Management changes have come quickly under David Solomon, who took over Oct. 1 as Goldman's chief executive. The firm has named a new president, replaced its chief financial officer, put two new executives in charge of its trading business, and begun to change the way it covers its most important clients.

Mr. Vella, an Italian-born banker, has been closely involved in a pair of recent black eyes for Goldman. He structured a Malaysian bond offering that has ensnared Goldman in a sprawling corruption probe that is likely to carry a large financial penalty. He also worked on a derivative sold to Libya's sovereign-wealth fund that ended up in court last year. (The firm was absolved of wrongdoing. The trial, at which Mr. Vella testified, made public unflattering details about the firm's dealings with the fund.)

Ms. Richdale joined Goldman in 2013 as a highly touted hire from Morgan Stanley. Hong Kong-born and fluent in Mandarin, she developed relationships with regional giants including Singaporean state investment fund Temasek Holdings Pte. Ltd.

Ms. Richdale and Mr. Vella will move to a role that entails more client face-time, people familiar with the matter said. Ms. Richdale will relinquish day-to-day oversight of the business at a time when Goldman is trying to put more women in management roles.

Asia has been a tough region for Wall Street firms, despite its fast-growing economies. Underwriting fees are lower than in the U.S. and tend to be split among a bigger group of banks. Merger activity runs hot and cold, with heavy influence from government officials. In 2016, Goldman laid off dozens of bankers in Asia as deal volume slowed.

Of Goldman's three geographic divisions, Asia is the smallest and least profitable. The principal investments that once boosted returns -- Goldman's ownership stake in the Industrial & Commercial Bank of China Ltd. was profitable enough to merit its own line item in the firm's financial reports for years -- have mostly rolled off.

In 2018's first half, Goldman made $767 million in pretax profits in Asia, Australia and New Zealand, about 11% of the firmwide total. Asia is a small contributor to overall profits at most Western banks operating in the region.

Goldman is ranked No. 1 this year in stock underwriting and M&A in the region, excluding Japan, according to Dealogic. It helped lead the Chinese IPOs of smartphone maker Xiaomi Corp. and online-services platform Meituan Dianping, and is a lead underwriter of Tencent Music Group Entertainment's upcoming listing in New York.

Mr. Leland, a Midwesterner who has spent time in the U.S. and London for Goldman, is seen as a steady hand and experienced banker.

Further down the ranks, executives being primed for bigger roles include Raghav Maliah, Goldman's head of Asia technology banking; Aaron Arth, who oversees underwriting; and Iain Drayton, who covers financial sponsors in the region, according to people familiar with the matter.

Write to Julie Steinberg at julie.steinberg@wsj.com and Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

October 22, 2018 02:47 ET (06:47 GMT)

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