New approach: People on the pavement outside the Goldman Sachs headquarters in New York. Goldman is ‘intensely focused’ on Solomon’s refreshed strategy and his turnaround plans are said to be on the right track. — Bloomberg
NEW YORK: Goldman Sachs’ board supports chief executive officer David Solomon’s focus on its core Wall Street businesses and asset management, according to two sources close to Solomon.
The executive is tasked with reviving the bank’s stock, even as scepticism from some investors and employees grows.
The 12-member board of directors is intensely focused on Solomon’s refreshed strategy, one of the two sources told Reuters, after the firm’s foray into the consumer banking business saddled Goldman with losses and left if lagging rival Morgan Stanley.
The expected arrival of Tom Montag, who was approached by Solomon, also signals to insiders that the chief executive and his turnaround plans have internal support at the top, separate sources said.
The assessment, which follows Goldman’s recent board meeting in India, has not been previously reported.
It shows that the circle around Solomon believe in his ability to revive the bank’s fortunes.
The bank’s shares have fallen about 2% in 2023, lagging competitors Morgan Stanley and JPMorgan Chase where shares have risen 8% and 15%, respectively.
Even so, Goldman’s stock is still outperforming the S&P banks index, which is down more than 3% this year.
Goldman is trading at a forward price-to-book multiple of 0.99 times compared to JPMorgan, which trades at 1.43 times and Morgan Stanley’s 1.53 times, according to Refinitiv’s Eikon data.
The bank declined to comment on its share price performance.
David Wagner, a portfolio manager at Aptus Capital Advisors, exited his small position in Goldman Sachs months ago because he was unimpressed with the handling of the consumer business.
“The inability to execute on this front has led us to believe that there is a lot of internal strife at the company, which could create employee retention problems in the future as faith in David Solomon could be lost,” Wagner said.
Analysts have questioned the banks’ reorganisation, which the bank argued strengthened its core business.
The firm has been belt-tightening in an ongoing push to cut US$1bil (RM4.54bil) in costs, targeting smaller and smaller line items and contemplating more job cuts, sources previously said.
More bad news is expected when the bank is likely to report an almost 59% drop in earnings per share in its second quarter results along with a writedown on financial technology business GreenSky.
Marcus, the consumer business, lost US$3bil (RM13.63bil) in three years, and is being wound down.
Solomon approached former Bank of America chief operating officer Tom Montag after his retirement to discuss a Goldman board seat, according to two sources with knowledge of the situation.
Montag was recommended by the board’s nominating committee to join as an independent director, according to a regulatory filing last month.
Montag previously worked at Goldman for 22 years and served as the co-head of its global securities business.
Known as an intense and hands-on boss, he is expected to fortify Solomon’s position, according to five senior sources who worked with the executive.
The board’s secretary did not respond to direct requests for comment. Several board members did not respond to requests for comment, while others could not be reached for comment.
A Goldman Sachs spokeswoman said in a statement: “David and the leadership team are focused on executing on the strategic goals we laid out at investor day to grow and strengthen our existing businesses, diversify our products and services and operate more efficiently.” — Reuters
