New York: Nicole Zenel, an MBA (master’s of business administration) student, has read the negative stories about Goldman Sachs’s role in the financial crisis, its subsequent record profits and its decision to set aside $16.7 billion (around Rs76,000 crore) for pay and bonuses after receiving $10 billion from the US Treasury.
Strong reputation: Goldman Sachs headquarters in New York. Business school students aspire to work with the firm for its financial success and attractive pay despite its criticism in the wake of the credit crisis. Andrew Harrer / Bloomberg
That didn’t stop Zenel from applying there for an internship.
“I’m not looking at it for that $20 million bonus,” said Zenel, 24, who is pursuing a master’s degree in business administration at the Massachusetts Institute of Technology (MIT) Sloan School of Management in Cambridge. “I’m more looking at it as an opportunity to work for a solid firm that has a track record of success.”
Shareholders are suing New York-based Goldman Sachs over its bonuses, and publications from The New York Times to Rolling Stone have criticized the company for selling securities backed by subprime mortgages and trading in financial instruments that helped trigger the US government bailout of American Insurance Group Inc. The critics blame Goldman Sachs for contributing to the worst credit squeeze since the Great Depression, which has cost financial firms $1.7 trillion in losses and writedowns worldwide since 2007.
The bank’s reputation remains strong among aspiring MBAs. It was ranked the fourth most desirable place to work in a survey of 6,207 MBA candidates at 67 business schools from December 2008 through March 2009 by Universum Group, a Stockholm-based marketing company. Goldman Sachs, which was rated third the previous five years, trailed No. 1 Google Inc., based in Mountain View, California, and the consulting firms McKinsey and Co., in New York, and Bain and Co., in Boston.
Goldman Sachs hasn’t seen any decline in job enquiries from MBA students since last year, Sandra Hurse, vice-president for global recruiting, wrote in an email. “Our applications numbers remain on par with previous years, and attendance at our recruiting events on campus this year were high,” Hurse said.
The events leading up to the financial meltdown were “deeply humbling” for the investment banking industry, Goldman Sachs chairman and chief executive officer Lloyd Blankfein said last year in an 7 April speech to the Council of Institutional Investors. In June, Goldman Sachs repaid with interest the $10 billion it received in October 2008 from the US government. The company’s share price has at least doubled during the past 12 months.
Goldman Sachs is scheduled to report fourth quarter financial results on 21 January. The bank is expected to post earnings of $5.38 a share, the most in two years, according to the average estimate of 22 analysts surveyed by Bloomberg.
Business school students, especially those interested in investment banking, said in interviews they want to work at Goldman Sachs because of its financial success, its influence on Wall Street and its high-energy, lucrative workplace.
The money is attractive, especially for students incurring debt to pay for business school, said Jackie Wilbur, director of career development at MIT’s Sloan.
“In broader society, ‘investment banking’ is a bad word,” said Simon Johnson, an economist at Sloan who is writing a book about the history of the finance industry. “Among MBAs, to them, money is money and Goldman Sachs pays a lot of money. And they’re not dumb. They know that Goldman Sachs won big in the latest boom-bust-bailout cycle.”