Goldman Sachs confirmed today that Alex Ehrlich, the public face of the Goldman Sachs prime brokerage group in London for the last three years, has left the firm. He takes up a similar position at UBS Warburg in May.
Understandably, Ehrlich himself was keeping a low profile this week, though he is understood to be in New York. The consequent void has filled with speculation about why the twenty-two-year veteran had chosen to leave. One school has it that elevation to a partnership had eluded him once too often. Another holds that Ehrlich was uneasy from the moment Emmanuel Roman arrived as head of the European prime brokerage group when Goldman added the derivatives component to its offering. He would also be less than human, says this school, if he was indifferent to the fact that a contemporary (Mitch Lieberman) was calling the shots in New York.
A third school- and the one most charitable to the internal political culture of Goldman Sachs – is that Ehrlich was made an offer he could not refuse. Certainly, his acquisition would not have been cheap. Not only has Ehrlich fronted a conspicuously successful operation in Europe – data from industry journal EuroHedge shows that Goldman has eroded the dominant position of Morgan Stanley significantly in both of the last two years – but the Swiss bank will have had to buy their man out of his stock in Goldman Sachs. What is more, Ehrlich knows better than anyone how overcrowded a field European prime brokerage has become of late, and will have been acutely conscious not only of his own value to Johnny-Come-Latelys of all kinds but also of a personal need to limit the downside. In that last sense, his choice of a rich, fat bank such as UBS looks astute.
But then there is a fourth way of looking at Ehrlich’s change of venue: as a statement of intent by UBS Warburg. Though the Swiss bank inherited a robust prime brokerage operation in the United States from Paine Webber, clients tend to use it in a secondary role and its London operation is relatively inconspicuous by comparison with Deutsche and Lehman, let alone Goldman Sachs and Morgan Stanley. Ehrlich, as Head of International Hedge Fund Services, will be the Managing Director responsible for all securities lending, prime brokerage and equity swap activities at UBS Warburg. He will report to Mitch Moore, Global Head of Equity Finance. “He is one of the key senior managers responsible for building their leading global prime brokerage business and we are very much looking forward to him bringing his significant experience to our organisation,” says a UBS Warburg spokesman. “This is a new position, and is due to the successful growth of our Equity Finance business. We are increasing the size of the management team and consolidating a variety of activities internationally under Alex.” At Goldman, meanwhile, the organogram is also being re-designed. There are no plans to replace Ehrlich directly. Emmanuel Roman, who as global co-head of prime brokerage alongside Mitch Lieberman and Ravi Singh in New York was effectively Ehrlich’s boss anyway, is now longer one half of a de facto duumvirate. In short, Roman is now sole head of European prime brokerage. Earlier this month, Rob Munro and James O’Connor had risen to become co-chief operating officers. Roger Denby-Jones is now co-head of European prime brokerage sales, alongside Rob Munro. Mark Weeks, the public face of securities lending at Goldman in London, has become chief administrative officer for securities services in Europe.
It is hard not to notice that Goldman was more than a little shocked by the departure of Ehrlich, perhaps less because of his seniority and length of service with the firm than the reminders this week of his high profile in the industry and the press in Europe. “Alex was a great guy, and we wish him all the best in his new job,” says a spokesman. “It is sad, but these things happen.” Certainly, Ehrlich has a quality rare in modern investment bankers, if not in their antecedents: a hinterland. It remains to be seen whether UBS Warburg will allow him to spend any time there.