40 Wednesday January 19 2022 | the times
Business
A sharp slowdown in trading revenue
and a jump in costs left fourth-quarter
results at Goldman Sachs short of
expectations yesterday.
The American investment banking
giant’s lucrative role in the global deal-
making boom failed to offset a weak-
ening in trading activity as markets
Kier and Tilbury Douglas
‘deal’ gets silent treatment
Robert Lea Industrial EditorTwo leading construction companies
that before the pandemic had been
tipped as most likely to follow Carillion
into collapse were said yesterday to be
in merger talks.
However, speculation that the listed
Kier Group would launch a takeover of
the privately held Tilbury Douglas —
better known as Interserve — was
dampened when Kier failed to make a
statement to the London Stock
Exchange, which it would be expected
to do if a deal was close. That Kier
declined to comment led to talk that in-
terested parties in the City had leaked
details after becoming frustrated at a
lack of progress.
Sky News earlier had reported that
Kier was in exclusive talks to acquire
Tilbury Douglas to create an enlargedprivate contractor delivering public in-
frastructure projects and buildings.
Any deal would represent a remark-
able recovery at Kier. It has been
through two financial restructurings in
the past three years, in which share-
holders and City investors have been
tapped for £500 million to shore up a
company suffering from over-expan-
sion and too many acquisitions.
Tilbury Douglas was the construc-
tion division and founding component
of Interserve, best known for its build-
ings maintenance and caretaking busi-
ness. It was plunged into crisis after
problem contracts, most notably build-
ing energy-from-waste incinerators. It
slimmed down to the construction
business and changed its name back to
Tilbury Douglas.
Shares in Kier rose 3p, or 2.8 per cent,
to 109½p.Top secret
project hits
QinetiQ in
the pocket
Goldman Sachs counts cost of
stability in world stock markets
Callum Jones
US Business Correspondent
stabilised. The revelations sent shares
in Goldman Sachs down by 7 per cent
in New York.
Revenue at the bank rose by 8 per
cent to $12.64 billion in the three
months to December 31, but net profits
fell by 13 per cent to $3.81 billion. Both
figures were below forecasts on Wall
Street.
However, David Solomon, the bank’s
chairman and chief executive, said thatas a whole 2021 had been a record-
breaking year for Goldman as it had
capitalised on a surge in mergers and
acquisitions.
Goldman Sachs is one of the world’s
best-known investment banks, with a
market value of more than $130 billion
and 40,000 staff worldwide. It is more
reliant than any other big American
bank on services such as investment
banking and trading. Its investmentbanking operation continued to deliver
the goods in the fourth quarter, with a
45 per cent surge in revenue to $3.8 bil-
lion as Goldman raked in advisory fees
from what it described as a “significant
increase” in completed mergers and
acquisitions. The bank maintained its
dominance in that area, topping the
international rankings for advisory fees
from dealmaking for another year. It
played a key role in initial public
offerings and blank-cheque deals with
special purpose acquisition companies,
or Spacs.
However, the performance of its
global markets division, where revenue
fell 7 per cent to $3.99 billion, was a dis-
appointment. Sales from equities de-
creased as market volatility subsided.
A 23 per cent increase in operating
expenses to $7.27 billion also caused
consternation as Goldman dug deep to
pay its bankers in a competitive battle
for talent. The jump “reflected signifi-
cantly higher compensation and bene-
fits expenses [reflecting strong per-
formance], professional fees and net
provisions for litigation and regulatory
proceedings”, it said.
Goldman’s failure to meet analysts’
projections in the last quarter raises the
prospect of an end to a bumper period
for the bank during the pandemic. It
had reported a series of record quarters
in a lively two years in capital markets.
Last week JP Morgan Chase and
Citigroup also revealed considerable
drops in their trading businesses, trig-
gering a sell-off in banking shares on
Friday. Investors noted how JP Mor-
gan, like Goldman, had announced a
sharp rise in costs.
Solomon, 60, said that the firm’s
extraordinary performance last year
was “a testament to the strength of our
client franchise and people. Moving
forward, our leadership team remains
committed to growing Goldman Sachs,
diversifying our businesses and deliver-
ing strong returns for shareholders.”
One of the areas in which Goldman is
seeking to diversify is consumer bank-
ing. It launched Marcus, a digital plat-
form, in Britain in 2018.
Brennan Hawken, an analyst at UBS,
told clients that continued pressure
“seems likely” and that this raised
questions about the outlook for Gold-
man Sachs. Shares in the banking giant
closed down $26.81 at $354.13 in New
York last night.Qinetiq’s robot
systems are used
in the army’s
unmanned ground
vehicles