Q2 Proves It Again: Goldman Sachs Is the Greatest Investment Bank in the World

When it comes to the business of advising on mergers and acquisitions, it still doesn't get any better than Goldman Sachs (NYSE: GS  ) . Pun aside (seriously), the M&A bankers there are the gold standard.

According to data from Thomson Reuters, Goldman's $423 million in M&A fees put it at No. 1 globally despite the fact that fees were down from last year. Goldman was also No. 1 in the first quarter and all of 2011.

Goldman got edged elsewhere. In equity issuance, Morgan Stanley (NYSE: MS  ) , JPMorgan Chase (NYSE: JPM  ) , and Citigroup (NYSE: C  ) were ahead of it. It was down at No. 7 for bond issuance. In total fees across all products, it was third after JPMorgan and Bank of America (NYSE: BAC  ) .

But when it comes to true-blue investment banking, the M&A bankers are the rock stars and Goldman is The Beatles. It's too bad that investment banking is far from the headline business for Goldman.

Over the past six months, investment banking contributed $2.4 billion to Goldman's revenue (M&A was $958 million of that). The euphemistically named "Institutional Client Services" -- better known as Goldman's trading division -- accounted for $9.6 billion of the company's revenue. Asset management kicked in $2.5 billion.

Hop in a way-back machine, and it wasn't nearly as lopsided when Goldman first hit the public markets. In 2000, investment banking was $5.4 billion of the bank's revenue, while trading was $6.6 billion, and asset management was $4.5 billion.

Goldman apparently still likes to think of itself in terms of its M&A banking roots -- it started off its second-quarter earnings release by highlighting that it is numero uno when it comes to global M&A. That's cute. It's sort of like a major supermarket claiming that it sells fresh-baked "artisanal" breads.

But let's call a spade a spade here. It's silly to continue calling Goldman an "investment bank." Yes, it does offer investment banking services, but it's a trading house, hedge fund, or, if you want a more PC label, a broker dealer.

The financial heavies are getting a lot of press these days. And much of it is negative. But there's one small bank that's flying under the radar, and it has some of the best operational numbers you'll ever see. The Motley Fool featured it in its brand-new free report: "The Stocks Only the Smartest Investors Are Buying." We invite you to download a free copy. To find out the name of the bank Warren Buffett would probably be interested in if he could still invest in small banks.

The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Goldman Sachs. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Matt Koppenheffer owns shares of Bank of America and Morgan Stanley but has no financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.


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