* Dutch investment firm APG says Goldman must put client needs first
* United Technologies backs Goldman, says bank can add value
* Dimon tells staff not to take advantage of competitor's situation
* Barney Frank says episode to impact bank push back against reform
By Sinead Cruise
LONDON, March 15 (Reuters) - Joining a growing chorus of criticism, one of Europe's largest asset managers lashed out at Goldman Sachs Group Inc for not communicating quickly enough with clients after ex-banker Greg Smith publicly condemned the way the bank treats clients.
APG, a Dutch investment adviser that runs 300 billion euros of assets for more than 4.5 million people in the Netherlands, said it was surprised it took the Wall Street bank more than a day to offer APG any reassurance on points raised in Greg Smith's resignation letter.
"We would have expected that a company that faces such a big media backlash over something so core to their business such as client trust would have instantly reached out to those clients to say something," APG spokesman Harmen Geers told Reuters.
Smith's scathing remarks, published in the New York Times on Wednesday, have prompted an outpouring of criticism, ridicule - and defense - of Goldman, the storied Wall Street firm that has become a lightning rod for anti-bank sentiment.
After the piece appeared, Goldman Chief Executive Lloyd Blankfein and Chief Operating Officer Gary Cohn issued a memo to staff describing the views and observations of the former vice president as "foreign" to most of his 12,000 peers.
Blankfein also sent Goldman Sachs employees a voicemail on Wednesday urging them to reach out to clients and saying they had support from CEOs all over the world, a person familiar with the situation said.
On the voicemail, Blankfein read out two examples of support from clients, the source added.
Geers said the bank contacted APG late on Thursday offering a copy of the staff memo and telephone explanation of its message, a gesture he described as "too little, too late."
Goldman Sachs made no immediate comment when asked how it was communicating with clients.
SUPPORT FOR GOLDMAN
While the criticism has sparked numerous "me too" responses, at least one client using Goldman's investment banking advisory services said it respected the firm's knowledge and experience.
"We've had a love-hate relationship with Goldman for a number of years," United Technologies Corp Chief Financial Officer Greg Hayes told reporters in New York on Thursday.
"For us it's about what these banks bring to the table. I think Goldman has the intellectual capital, they've got the know-how to do these transactions. There's other banks out there, but Goldman is still the preeminent investment bank and they give solid advice."
The diversified U.S. manufacturer has hired Goldman to sell some of the industrial units of its Hamilton Sundstrand arm.
Hayes said Smith's resignation letter would not change his opinion of the firm.
"There's bad apples and there's bad actors at every one of these companies. Banks have a bad reputation anyway," Hayes said. "But I think Goldman can add value."
Yet, Goldman recently drew criticism from a prominent Delaware judge for serving as both an adviser to and benficiary of El Paso Corp's $23 billion sale to Kinder Morgan.
And among investment managers, faith in Goldman's reputation appeared more tattered.
"One of the more important messages (Smith) gave was the need for the bank to refocus attention on clients and attend more closely to their needs ... but even now, Goldman, as well as some media, seem to be overlooking that," Geers of APG said.
The lack of quick, direct communication with APG underlined how much work Goldman needs to do to prove it puts its customers first, the Dutch group said.
"I have seen the internal memo from Goldman to its employees which says 'we all know this isn't true,' but perception is reality and a service provider lives or dies by whether they have happy clients," Geers said.
"What about trying to re-win trust?" he said. "Goldman's clients are now being forced to explain to their clients why they are doing business with Goldman. We are now obliged to answer questions because of their company culture. From the bank's point of view, that is very bad."
Goldman has bounced back from several dents to its image in recent years, but industry insiders say the unprecedented attack from a former employee could start to push much larger volumes of prospective business to rivals. And it stirred a wide range of reactions.
Jamie Dimon, CEO of rival bank JPMorgan Chase & Co, cautioned employees against trying to "seek advantage from a competitor's alleged issues."
IMPACT ON BANK REFORMS?
At least one wasted no time in saying it put clients first. "In my experience ... client success and firm success can peacefully coexist; in fact thrive," Harris Private Bank Chief Investment Officer Jack Ablin said in an open letter. He oversees $60 billion of investments for individuals and families.
Congressman Barney Frank, an architect of the 2010 Dodd-Frank financial reform law, said Smith's piece would have "a big impact" on the banking industry's efforts to push back against financial reform.
"It puts the burden on Goldman Sachs and others to show us how what they do benefits the clients and therefore the broader economy," he told Reuters.
One London-based former hedge fund client of the bank, who declined to be named, said some asset managers and family offices were thinking twice about doing business with the bank before Greg Smith's remarks.
"We took them off our system some months back ... I used to know a few guys there, there were a few good ones in that bunch and I have noticed that just about all of them have left in the last year," the manager said.
"They used to tell me that they loved the firm; that it looked after its people and that it had a really good 'code.' And now those people are leaving, so it reflects what (Smith) is saying."
Goldman shares ended 2.2 percent higher on Thursday amid gains for the broader banking sector.
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