Goldman's big plans for Australia and NZ

Andrew Barclay. Photo / Sarah Ivey

Goldman Sachs' plans to take full control of its Australian and New Zealand operations will have far reaching ramifications for its businesses in the region, Goldman's New Zealand chief executive Andrew Barclay says.

The transaction is expected to be completed in a few weeks' time but further down the track the global investment bank and securities firm wants to relocate its Australian and New Zealand dollar "book", which is at present run out of Tokyo and Hong Kong, to Australia, Barclay told the Herald.

"The objective is to bring the aussie dollar, kiwi dollar, interest rate and derivative books closer to the client base," Barclay said.

The Australian dollar is the fourth most actively traded currency in the world, while the kiwi dollar ranks at around eighth. "They are big volume currencies so we would absolutely be more aggressively making prices in kiwi and Aussie dollars as a result."

Goldman Sachs, one of Wall St's most aggressive banks, has held a minority stake in the Australian business since 2003, when it agreed to buy 45 per cent of Australian share-broker JBWere.

In July 2009 Goldman sold 80.1 per cent of the venture's private wealth business to National Australia Bank, retaining 19.1 per cent, and rebranding to become Goldman Sachs and Partners (GS&P).

The firm last week announced that it had started a formal process, expected to take two or three weeks, to acquire the 55 per cent of GS&P that it does not already own from its management and employee shareholders. GS&P employs around 60 people in New Zealand and 600 in Australia.

"The reality is that we have been in a joint venture with Goldman since 2002/3. Their name has been on the door, and Goldmans don't put their name anywhere where they don't control the business," Barclay said.

"We have been totally in sync with them for the best part of eight or nine years now, and so all that is really happening is ... just the tidying up of minority ownership," he said.

The one part of the business not aligned was GS&P's balance sheet.

"We exist with a balance sheet of around $1.5 billion and Goldman operates with a balance sheet of around $1 trillion, so there is some benefit to us - as much as our competition hates the thought of it - and it's simply around servicing our clients and being able to fund their needs in the way that some other large banks do when large transactions occur," he said.

Barclay stressed that Goldman's expansion would not happen overnight. "We are not going to turn that on tomorrow. It's a huge move to bring all that down from Hong Kong and Tokyo to this end of the world," he said.

"When that happens we will be a really significant business here."