Goldman time may hurt ECB's new head

Shanghai Daily, March 21, 2011

Critics of Mario Draghi may have few arguments to block his chances of becoming Europe's top central banker other than just mentioning the fact that he worked at Goldman Sachs for a number of years.

So powerful is the memory of the financial crisis and the role that investment banks played in it, that the Italian's time at the world's best known - and often maligned - investment bank is seen by some as a threat to his hopes.

But there was nothing sinister about the 63-year old's time at Goldman, several people who worked with Draghi at the bank have told Reuters. His role was primarily to win business among corporate clients through his strong contact book.

"In 2003 and 2004, Goldman Sachs did everything that happened in Italy and that had a lot to do with Draghi," said one banker who advised Draghi when he was at the Italian Treasury, and later worked for him at Goldman.

"My team did the groundwork, but he was essential in providing advice to clients," this person said.

Goldman Sachs and Draghi declined comment.

Since last month's shock withdrawal of Bundesbank President Axel Weber, most analysts say Draghi is left as the best qualified and, for the moment, only obvious candidate to take over the top spot at the European Central Bank in October.

Yet many are still loath to see the hugely powerful job go to a southern European country with a history of high inflation and wayward public finances.

For these critics, who cannot publicly admit nationality is an issue, Draghi's time as a Goldman managing director from 2002 to 2006 risks becoming the only obstacle they can raise.

"I don't think people can point to anything specific on what Draghi did at Goldman," said Giada Giani, an analyst at Citibank.