SAN FRANCISCO - Goldman Sachs Group Inc., the fifth-biggest underwriter of municipal bonds in recent years, has made "significant" cuts in its municipal finance business, market sources and former employees said last week.

Goldman Sachs, the biggest U.S. investment bank until it converted into a bank holding company last month, has publicly announced that it will cut 10% of its workforce. Sources inside and outside the firm reported that Goldman cut as many as 30 municipal finance professionals last week, but the precise number could not be confirmed.

"They're not just trimming fat here," said one New York banker, who asked not to be identified because he didn't want to comment publicly about unfortunate colleagues. "They're letting go some pretty seasoned and talented people."

Company spokesman Michael Duvally said Goldman does not comment on specific layoffs.

In San Francisco, clients familiar with the firm's layoffs said that vice president Andrew S. Nakahata, a health care banker, and at least one associate in Goldman's 10-person office there were laid off last week.

The Chicago office remains open, but the firm closed its institutional sales desk, cutting at least three professionals - Jack Andrews, Joseph Wark, and Thomas Wood - and those operations were consolidated with the New York City office, according to an internal source.

On the banking side, the Chicago office's lead general government banker Carlos Pineiro and health care banker Jay Stearns are still with the firm. Vice presidents Richard Bellis and Phillip Kaplan have left the firm, but sources inside the firm said they departed well before the current round of cuts began.

In Houston, vice president Richard Ramirez and VP Kerry Rudy, a health care banker, were laid off, according to a competitor who was tracking the layoffs in hopes of snagging some of Goldman's talent.

An internal Goldman source also said New York VP Frank Oh, a general government and transportation banker with large New York state clients, and VP Robert Foggio, a housing banker, were laid off along with "several" other bankers or associates.

The picture for Goldman workers and clients remained unclear last week as the firm declined to say what percent of its muni workforce was being let go. Calls to individual bankers were being referred back to public relations in New York.

The Bond Buyer confirmed names of laid off workers from at least two sources. Most of the sources were friends, clients, or colleagues who heard about the job losses from the workers.

The list of names - which is not comprehensive - shows that fairly senior public finance professionals are losing jobs. Less well-known analysts and associates also are losing work in one of the sharpest economic declines since the Great Depression. The cuts indicate that Goldman Sachs has decided to deploy capital and human resources away from the muni market.

Goldman Sachs has been lead underwriter on 209 deals worth $28.1 billion thus far this year, according to Thomson Reuters. Goldman's market share rose to 8.2% this year, from 6.7% in all of 2007.

The cuts at Goldman follow the closure of UBS Securities LLC's muni business and layoffs at investment banks Merrill Lynch & Co. and Bear Stearns & Co., which were or are being swallowed up by bank competitors.

Bloomberg News reported last week that Citigroup, the biggest muni underwriter, had begun to notify 9,100 workers, or about 2.6% of its workforce, that their jobs will be cut over the next 12 months, citing an anonymous source.

Citi spokeswoman Danielle Romero-Apsilos declined to provide details for the public finance line of business. Industry sources said they did not believe the firm was making major cuts in the muni business at this time.

The flow of deals has slowed dramatically since the latest round of the financial crisis erupted following Lehman Brothers Holdings Inc.'s mid-September bankruptcy, but longer-term, voters continue to approve bond issues and issuers continue to face significant infrastructure needs. The key for bankers and others is figuring out how to survive in a rapidly shifting landscape. Senior market professionals said they expect good bankers to continue to get offers from regional firms because the underlying business has not disappeared.

Regional firms - such as Piper Jaffray & Co., Stone & Youngberg LLC, Raymond James & Associates, and RBC Capital Markets - are snatching up high-level talent. RBC, for example, has hired 12 bankers in its San Francisco and Los Angeles offices, and it has expanded the amount of office space it leases there. But the firm is being picky about who it hires.

"It's fair to say that we can be fairly selective right now," said Anthony Taddey, a managing director for RBC in Los Angeles. "I'm getting a lot of calls" from job seekers.

Taddey refused to discuss the names of Goldman workers who were laid off, and he was not the source of any of the names that appear in this article. He's said he's still looking for bankers who can bring in health care, education and middle-market general municipal business.

"We continue on pretty much the same path" of opportunistic hiring, he said. "We think it's a viable market and a good market."

Yvette Shields, Caitlin Devitt, Ted Phillips, Christine Albano, Richard Williamson, and Jason Philyaw contributed to this story.


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