Within days -- perhaps even hours -- of news that Goldman Sachs was facing fraud charges from U.S. regulators, rivals seized on a chance to elbow in front of Wall Street's most profitable bank.

Investment bankers have been lobbying executives at state-owned Agricultural Bank of China and pushing officials in Beijing to drop Goldman as an underwriter for the more than $20 billion IPO the Chinese bank is preparing, according to sources familiar with the matter.

The sources said rival bankers were also asking officials at state-controlled Bank of Communications <601328.SS> to ditch Goldman from its joint global coordinator role in the $6.1 billion rights issue that China's fifth-largest bank is planning for the Hong Kong Stock Exchange.

A lot of it probably is wishful (banker) thinking: There is no indication that either AgBank or Bocom will push Goldman aside.

In fact, everything appears hunky-dory. AgBank on Tuesday asked the firm to take the lead in its planned roadshows to sell the IPO to investors, according to one source.

AgBank and Bocom were unavailable for comment. Goldman declined to comment.

The rivals are well aware that in China how an organization is perceived can mean everything, and that a tainted Goldman could be vulnerable.

In particular, the nature of the case brought by the U.S. Securities and Exchange Commission provides fertile ground for the bank's rivals because it alleges that Goldman failed to tell clients key information about a subprime mortgage securities product that it sold to them in 2007.

The product blew up during the financial crisis and led to the clients suffering big losses.

Goldman has addressed questions about client loyalty by saying that its impressive quarterly earnings on Tuesday underscored the support it has from clients. The bank has denied any wrongdoing and has vowed to fight the charges.

LONG TERM RISK

Industry veterans and even direct competitors wonder whether the SEC has overreached in its case against Goldman but in the shark tank that is investment banking, dealmakers smell blood.

People have been known to market against Goldman by saying things like: 'Look you never really are a client of Goldman. The only client of Goldman is Goldman,' said a senior U.S.-based investment banker who declined to be named.

If I knew I was pitching something against Goldman tomorrow, I'd probably make some flippant remarks.

In the United States, Goldman isn't seen bleeding business anytime soon but in the longer run some perceive there is more risk.

People will continue to use Goldman, but at the moment it's a natural question to ask yourself whether it makes sense to award that mandate today or whether you should wait a little bit and let the dust settle, said a U.S.-based investment banker who specializes in financial institutions.

This is going to be pretty serious for Goldman as time goes on, said the banker, who did not want to be identified.

Some financial institutions are reviewing their dealings with Goldman Sachs during the financial crisis to see if they have any legal recourse.

On Friday, attorneys for Lehman Brothers filed notices of subpoena for firms including Goldman seeking access to documents and employees.

American International Group Inc took a loss of up to $2 billion last year as it ended credit default swaps it had written on some Goldman-issued CDOs, though these were different from those at the center of the SEC suit.

Such firms may have issues hiring Goldman for advice, the financial institutions banker said.

You have to ask yourself what are they thinking: Are they thinking about whether they have got causes of action against Goldman, and can they hire Goldman as an adviser on the one side while they may be seeking to recover on the other side?

The issues facing Goldman were underlined when Nick Clegg, the leader of Britain's Liberal Democrats, told a news conference on Tuesday that Goldman should be shut out of government contracts until the fraud case was settled.

The party is enjoying a dramatic surge in popularity ahead of a national election on May 6.

It's a common practice in the cutthroat banking world to pounce on a competitor who is either wading through a public relations mess or financial trouble.

When Lehman Brothers got into trouble, rival bankers expressed sympathy for their peer -- and simultaneously moved quickly to seize its clients.

The chance to cut Goldman out of a deal is the dream of many bankers because the firm has established itself as the top investment bank in the world. Its reputation and riches have been the envy of financial professionals.

That reputation took a hit with the fraud charges last week, adding to the impact of a stream of negative publicity over the past year.

It would still be an extraordinary measure for a company to drop Goldman entirely, especially given its stature, but there is now an impression among rivals that it is no longer impossible to successfully muscle in.

People probably won't pull IPO and M&A business from GS, but might hold off hiring them for projects, said another U.S. investment banker. But it will probably be temporary and just the next few weeks. There will be a bit of schadenfreude.

(Reporting by George Chen, Fiona Lau, and Kennix Chim in Hong Kong, Michael Wei in Beijing, and Paritosh Bansal, Megan Davies in New York; Writing by Michael Flaherty; Editing by Martin Howell and Ted Kerr)

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