Sloppy research and reporting from media outlets that German bank BayernLB (BAYB.UL) had cut all ties with Goldman Sachs (NYSE:GS) are untrue, as all the story really entailed the cancellation of only one consultancy agreement.
Communicating with MarketWatch, a spokesman for BayernLB said this, “Goldman Sachs was working for BayernLB in a special consultancy sense and this agreement was cancelled by BayernLB, just this agreement, not the whole business relationship to Goldman Sachs. We have to clear [it up] that the headlines I read today that we closed our relationship with Goldman are not really true.”
But even if the story were true, it would have been pretty much irrelevant, as BayernLB only accounts for about 6 percent, or just under $1 billion of the $16.3 billion in revenue Goldman Sachs generates in Germany. While not insignificant, they aren’t among the major financial institutions served by Goldman Sachs there.
So we do have to question what an alleged letter from BayernLB to Goldman Sachs meant, which supposedly stated this:
“Even if (SEC) proceedings are still underway, in which the presumption of innocence must prevail, the accusations levelled against your institution are so severe that the Bavarian landesbank, which is itself under close scrutiny and needs to adhere to the highest ethical standards, feels compelled to take this step.”
If BayernLB indeed had written the letter above, it’s hard to believe they would immediately retract it and change their position, although you never know what’s going on behind the scenes.
But the strength of the denial seems to tell me something is wrong with this “letter” from BayernLB to Goldman. Either it was planted or someone jumped the gun and sent it to Goldman prematurely, otherwise it doesn’t make much sense and would make BayernLB look amateurish and indecisive in the way they operate. Another possibility is if the letter actually exists, someone took a part of it and made it say what they wanted, and not what it communicated as a whole.
Reuters reported this story, saying they saw the letter, which was allegedly sent from the CEO of BayernLB.
Either way, I believe what BayernLB says in that it was related to one consulting piece of business they were doing with Goldman, and nothing more. To attempt to make this to look like the beginning of an exodus from doing business with Goldman by companies around the world simply isn’t true.
Still, Goldman recognized the threat and responded accordingly, knowing a story not based in fact could still do a lot of damage. It does underscore the tremendous emotion and irrational responses to Goldman Sachs as the government seems to want to make them an example of the excess which led to the global economic collapse.
