The battle to replace Lloyd Blankfein at the helm of Goldman Sachs intensified yesterday, following the explosive letter from a leading London-based employee revealing that clients are routinely referred to as "muppets" by bank insiders.
Analysts say the contents of the letter will increase the pressure on Goldman to ditch the trader-driven model that has been behind much of its recent profits and revert to its old motto: "long-term greedy".
In his letter, Greg Smith, the head of the firm's US equity derivatives department in Europe, claimed that clients' interests are "sidelined". He did not respond to emails or phone messages requesting comment.
That the letter comes from such a senior person in the London office would seem to be hugely damaging to the ambitions of Michael Sherwood, who runs the UK and Europe business based in Fleet Street.
A hard-driving trader, he was seen as a leading candidate to replace Mr Blankfein, 58, who is expected to go some time in the next two years, having been chief executive for six years. A trader who grew up in Brooklyn, Mr Blankfein is loved by the dealers on the New York floor and has become a fabulously wealthy man.
But critics say he put short-term profits before the bank's reputation. There have been calls within the industry for Goldman to hire an old-style, relationship banker to improve its reputation.
This puts John Weinberg, a scion of the Goldman dynasty, who inherited his father's clients, in a strong position. A profile of Mr Weinberg in Financial News in August 2010 noted: "His father would not allow Goldman to be involved in hostile takeovers and resisted taking the firm public."
Other internal candidates include chief financial officer David Viniar and chief operating officer Gary Cohn.
One possibility is that the bank is forced to go outside – a tactic it would be reluctant to employ.
Asked if clients would now depart, one bank analyst said: "To be honest, I genuinely don't understand why clients still deal with them. I hear lots of complaints, but for some reason fund managers don't vote with their wallet and take their business elsewhere. Why would I continue shopping at a supermarket if they continued to short-change me with poor-value products?"
A statement from Goldman said: "We disagree with the views expressed, which we don't think reflect the way we run our business. In our view, we will only be successful if our clients are successful."