Goldman Sachs Group Inc. (GS) plans to augment its workforce in Brazil by approximately 20% in 2011. The company aims to increase its hiring following growth in the Brazilian economy compared to its home market.
Goldman’s Brazilian unit has headcount of about 300 so far this year compared to 200 in 2010. Further, the unit intends to invest in asset management, research, private banking, sales, investment banking and trading.
Goldman has experienced a considerable amount of growth in Brazil over the past couple of years, and targets to explore more significant opportunities. The company is working hard to implement strong growth plans for its each product and division in the coming months.
However, Goldman did not disclose Brazil’s revenue and profits separately, but focused on strategizing on more multifarious products that generate higher profit margins, such as convertible debt and receivables securitization.
After failing twice to purchase local firms, in second half of 2009, Goldman succeeded in becoming a full-service bank in Brazil. In 1998, Goldman tried to purchase Banco de Investimentos Garantia SA, which was acquired by Credit Suisse Group AG (CS). Again, after seven years Goldman strived to purchase Banco Pactual SA, a top investment bank, which was later acquired by UBS AG (UBS) though sold back to BTG Partners in 2009.
Goldman’s closest competitors, JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) has about 630 and 400 workers, respectively compared to the company’s 300 total employees in Brazil.
Fundamentally, we expect Goldman to benefit from its well-managed global franchise, strong capital base, and industry leading position in trading and asset management. However, on a year-over-year basis, the company recorded lower equity trading and the overall revenue decline in the first quarter. However, we expect its prudent business model, market expansions and strong fundamentals to deliver better earnings in the upcoming quarters.
Currently, Goldman retains its Zacks #4 Rank (a short-term Sell rating). However, we maintain our long-term Neutral recommendation on the shares of Goldman.
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