Goldman Sachs Group Inc is reviewing conflict-of-interest policies and procedures for investment bankers in light of a recent controversy over a Goldman-advised deal.

The review comes after Goldman was criticized for advising El Paso Corp on its planned sale to Kinder Morgan Inc even though Goldman had a multibillion-dollar stake in the acquirer and its top energy banker held a $340,000 personal stake in Kinder Morgan.

We regret the El Paso Board wasn't aware of the investment and are reviewing our policies and procedures related to bankers' investments and how they are disclosed with the goal of strengthening them, Goldman said in a statement on Friday.

The review was first reported by The Wall Street Journal, which said Goldman investment bankers may be required to disclose personal financial holdings to clients.

The Wall Street divisions of other banks, including Barclays Plc , Bank of America Corp and Citigroup Inc , are also reviewing how they manage conflicts on investment banking deals, the Journal reported, citing unnamed people familiar with the matter.

Representatives for Citigroup, Bank of America and Morgan Stanley declined to comment. A spokesperson for Barclays could not immediately be reached for comment.

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Goldman's recent woes http://link.reuters.com/dyc27s

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Goldman's multiple positions in the El Paso-Kinder Morgan deal garnered particular attention after a prominent Delaware judge criticized the bank's handling of the conflicts.

At this stage, I cannot readily accept the notion that Goldman would not seek to maximize the value of its multibillion-dollar investment in Kinder Morgan at the expense of El Paso, but, at the same time, be so keen on obtaining an investment banking fee in the tens of millions, Judge Leo Strine wrote. He said he would reluctantly allow the deal to move forward.

Goldman was not blind to such criticism: While the two companies were still in talks, Goldman Chief Executive Lloyd Blankfein told El Paso CEO Douglas Foshee that Goldman was very sensitive to the appearance of conflict, according to court documents.

Wall Street's banking, trading and wealth-management businesses are rife with conflicts, and large investment banks already have policies in place to handle them, such as Chinese walls that research analysts must get special permission to cross if they need to communicate with bankers or traders.

But banks still routinely get into sticky situations. In recent years, Goldman has become enmeshed in conflict-of-interest scandals related to subprime mortgage investments, an investment in Facebook, and its one-time practice of passing analyst tips to important clients before others.

The disclosure to clients of investment bankers' personal financial holdings is not a common practice. While it would be a step toward greater transparency, it is not one that bankers are likely to embrace.

The Goldman banker with a personal stake in Kinder Morgan was Stephen Daniel.

On Friday morning, Morgan Stanley CEO James Gorman characterized conflicts as inevitable and even routine. Morgan Stanley's research analysts and financial advisers talk to clients every day about whether to buy stocks and bonds of companies that its bankers advise, and it is not unusual for a large investment bank to hold a stake in a company it advises on deals, Gorman said at an event hosted by Fortune magazine.

Morgan Stanley handles conflicts by being transparent with clients about its interests, he said.

The more obvious the conflict, the higher the standard of care, said Gorman. But, he added, there is inherent conflict -- I can't just say you can't do it.

(Reporting By Lauren Tara LaCapra, editing by Dave Zimmerman and John Wallace)