Goldman Sachs Group Inc. plans to ask junior bankers to confirm their loyalty on a regular basis in a bid to limit advances from talent-hungry buyout firms.
The investment bank will ask new analysts to certify every three months that they haven't already lined up jobs elsewhere, according to people familiar with the matter, who asked not to be identified discussing the confidential plan.
"We are committed to a culture where our employees act with integrity, consistent with all of our policies," said Goldman spokesperson Andrea Hurst.
The move is meant to thwart poaching by private equity firms that have been signing up junior bankers
near the start of their on-the-job training, a practice known as on-cycle recruitment. Some buyout shops are even approaching newbies before they show up for their analyst programs, stoking tensions across the industry.
Last month,
JPMorgan Chase & Co. told incoming graduates that they'll be fired if they are caught accepting offers of future jobs somewhere else before they complete their first 18 months at the firm.
Soon after,
Apollo Global Management told prospective investment-banking candidates that it wouldn't interview or extend offers this year to the class of 2027. Chief Executive Officer Marc Rowan said "asking students to make career decisions before they truly understand their options doesn't serve them or our industry."
The fight over talent creates a tough situation for banks, which try to maintain good relations with former employees who jump to other firms. Goldman in particular is known for cultivating a strong alumni network and boasts of "boomerang" hires when people return.
But if trainees secretly promise to take a job in the future, it can create conflicts of interest. Junior bankers are often privy to confidential information about banks' proposed or pending deals — information that may be valuable outside the company.
JPMorgan CEO Jamie Dimon said as much in September, when he called on-cycle recruitment unethical and said he may stamp it out.
"It puts the kid in a terrible position, and so I think that's wrong," he
told an audience at Georgetown University. "It puts us in a bad position, and it puts us in a conflicted position. You are already working for somewhere else and you're dealing with highly confidential information."
Stricter attempts to tighten controls on analysts have backfired in the past. In 2013,
Morgan Stanley ditched a policy to block junior bankers from talking with recruiters for outside firms after some of them complained, Bloomberg News
reported at the time.
