Goldman CEO Solomon to combine investment banking and trading in major overhaul
In one of the biggest reshuffles in the Wall Street firm’s history, Goldman Sachs Group decided to fold its biggest businesses into three divisions.
The firm, which is expected to report third-quarter earnings Tuesday, would make the announcement of the reorganisation within a few days, reports said.
Under this move, the firm is going to combine its flagship investment banking and trading businesses into one unit. At the same time, it would merge asset and wealth management into another.
Marcus, Goldman’s consumer-banking arm, will be part of the asset- and the wealth-management unit, reports added.
A third division will house transaction banking, the bank’s portfolio of financial-technology platforms, speciality lender GreenSky, and its ventures with Apple Inc. and General Motors Co.
Nothing concrete is known about how the makeover will impact Goldman’s senior leadership team, though at least a few executives will have to assume new roles.
Reports said the reorganisation is the latest step in chief executive David Solomon’s push to shift Goldman’s center of gravity toward businesses that generate steady fees in any environment. The move indicates the firm’s steps to overcome skepticism, from investors and even among some of its own executives, over its ambitions for consumer banking.
The firm’s trading and investment-banking acumen have been Goldman’s hallmark for decades, making huge profits when the markets favoured risk-takers and bold deals. In recent years, Goldman has sought to sharpen its trading arm’s focus on client service.
The company’s shares have struggled to keep pace with its rivals. The firm traded at 0.9 times its book value as of June compared with 1.4 times at Morgan Stanley and 1.3 times at JPMorgan.
The firm has sought to narrow the gap by accelerating the businesses that command higher valuations on Wall Street.
It has invested in building its own consumer bank, and folding the unit into its asset- and wealth-management arm should create more opportunities to offer banking services to wealthy individuals.
According to the bank, it aimed to bring in $10 billion in asset and wealth-management fees by 2024.