- Goldman Sachs CEO David Solomon has taken steps to transform the Wall Street bank.
- But some of his efforts, including the consumer bank Marcus, have yet to pay off.
- Here’s a look at Goldman’s key initiatives, top power players, and biggest threats.
- Visit the Business section of Insider for more stories.
Goldman Sachs is going through a big transformation under David Solomon, the bank’s CEO since 2018, who famously moonlights as an electronic dance music DJ.
The investment banking powerhouse is trying to diversify its revenue by pushing into new businesses like consumer banking, credit cards, and wealth management. Goldman is also diversifing its physical footprint, opening offices in locations far from the New York City skyline, including Dallas, Tex., and West Palm Beach, Fla.
The effort is not without obstacles, however, and Solomon’s greatest challenge right now appears to balancing growth with declining revenues. The cost of running the bank’s money-losing consumer bank Marcus, for example, has become a lightening-rod issue internally, forcing Solomon to consider switching gears.
The potential pivot comes as the bank aims to cut staff this year for the first time since the pandemic hit. Wall Street in general is on track for a precipitous decline in M&A and IPOs dealmaking, thanks to rising interest rates and a general economic slowdown.
Here’s a rundown of other must-know news at Goldman, from struggles at its Marcus consumer bank to its return-to-office push, hires and exits.
Who are the top leaders at Goldman?
David Solomon took over in 2018 from long-running CEO LLoyd Blankfein, which has resulted in a new center of gravity when it comes to the power dynamics there.
Goldman in 2020 created a standalone consumer division that includes its Marcus lending unit as well as its wealth-management and private-banking businesses. Goldman now has four divisions: consumer and wealth management, asset management, investment banking, and global markets. The new setup matches the way Goldman reports financial results, a change the firm made in 2019 to better align with how Solomon wanted investors to think about the firm.
Stephanie Cohen, who was tapped to lead the consumer bank along with Tucker York, had long been considered a rising star at the bank. But in the face of recent questions over Goldman’s spending on the money-losing strategy, John Waldron, Goldman’s president and Solomon’s longtime lieutenant, has taken a more hands-on role.
Another Goldman rising star is Julian Salisbury, a soft-spoken Englishman, runs the bank’s growing asset management business.
In November 2021, Goldman Sachs elevated 643 people to its 2021 class of managing directors, marking its largest class yet. The class was also Goldman’s most diverse yet. It included a 30-year-old black belt, English major who’s opened up about experiencing ‘imposter syndrome’ at work, and former NFL player Justin Tuck.
This year, all eyes will be on Goldman’s new partner class.
Goldman’s struggles with Marcus
Goldman Sachs launched its Marcus unit in 2016. Since then, it’s team up with Apple to launch the popular Apple Card, and has been gearing up to add checking services.
Solomon has predicted revenue of $4 billion by the end of 2024, up from about $1.5 billion currently. But the money-losing unit has come under scrutiny internally and extrernally. David Solomon has pondered a potential retreat from the consumer banking strategy in the face of mouting woes and losses, as Insider’s Dakin Campbell has reported. The bank in August disclosed a probe by the Consumer Financial Protection Bureau into its credit-card practices. And the Federal Reserve has taken up a review of the unit, according to Bloomberg.
Recent Marcus departures include the exits of top Marcus bosses Omer Ismail and David Stark. And JPMorgan has poached the head of product at Marcus to join the bank’s digital and product leadership team for consumer and community banking. Goldman has also brought in new hires, including Peeyush Nahar, an executive at Uber, to head the bank’s consumer business.
Goldman’s return-to-office push
Despite his efforts to transform Goldman, Solomon is adhereing to tradition in other ways, including by calling workers back to the office five days a week as the coronavirus pandemic lifts. Other large banks, including JPMorgan and Citi, have said they would allow some employees to continue working from home.
In an effort to get workers back to the office, the company has been tracking employee ID swipes. Meanwhile, some pandemic perks have been pulled, including free gym memberships. While this has frustrated some staffers, the time to kvetch may have passed as layoffs now loom.
Goldman’s investment-banking revenues declined by 41% during the second quarter over the same period last year, prompting Chief Financial Officer Denis Coleman to warn that the bank would be seeking to rein in expenses, including by cutting staff.
Traditionally, Goldman cuts the bottom 5% or so of low performers each year, but halted that tradition during the pandemic as investment banking demand soared to new heights amid a larger dealmaking boom, resulting in increased an industry-wide talent shortage and record bonuses.
Third-quarter revenue is also expected to be down, despite the bank’s role helping Amazon buy primary-care firm One Medical for $3.9 billion.
In a sign that investment banking talent still has options, however, Goldman recently lost 11 members of its healthcare team amid complaints about working till 5 a.m. and lower bonuses.
Junior bankers in focus
Junior bankers became a big topic of discussion during the pandemic, starting in the spring of 2021 when the Goldman Sachs’ juniors vented about 100-hour work-weeks. The bank bumped base pay for investment-banking analysts after several other banks raced to increase compensation amid a talent shortage.
The going rate for investment-banking analysts on Wall Street, including Goldman Sachs, is now $110,000 before bonus, up from $85,000 pre-pandemic. But some Goldman juniors say working conditions haven’t necessarily improved, leading to an exodus of talent from the healthcare team.
The complaints come amid a wider call for change across Wall Street by young bankers who want more freedom to shut down their laptops at the end of the day.
Goldman’s wealth-management push
Goldman, a firm synonymous with enormous wealth, has in recent years tried to reshape itself as a bank that can count someone with just $1,000 to invest as a client just as it has long done business with large companies and the very wealthy.
It launched Marcus Invest, a robo-advisor with a $1,000 minimum. And it has reorganized how its wealth businesses are situated, creating a new internal consumer and wealth management division. Goldman has some 800 advisors within private wealth globally.
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