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Goldman Sachs leaves Wall Street wanting more



David Solomon's early months as CEO of Goldman Sachs have long been on rhetoric when he promised to take digital disturbance to the next level and carefully review his existing business while constantly embracing a new era of openness and the introduction of a millennium friendly "casual everyday" dress code.

But for all the future security of one of Wall Street's most venerable institutions, the bank's quarterly update on Monday failed to encourage investors to see signs of Goldman's strategic rebirth. The company's shares fell almost 4 percent, which led to a decline since Solomon acquired 1

1 percent in October. That makes Goldman the worst performer of the big six US banks since becoming CEO.

"So far there has been sound and rage … but little in terms of evidence (or progress) or recognition from investors," says Wells Fargo Bank analyst Mike Mayo, adding that Goldman's book value of around 0, 95 is "one of the lowest non-risk assessments in history."

Jason Goldberg, bank analyst at Barclays, said that while it was "definitely progressing" since Solomon took over, there was "much more work to do". [19659002] Here's the Solomon's to-do list:

The Master Plan

The main plan to take Goldman to the next era has been the only biggest talk point between investors and analysts since Lloyd Blankfine's 12-year-old executive as CEO ended last Salomon and his team promised a "front-to-back" assessment that would assess resource allocations and priorities throughout the business, an update originally promised in "spring" in 2019. On Monday, Goldman said it "surrounds" The upcoming update "should come in the first quarter of 2020, while promising incremental progress reports before then. Many analysts were not happy.

"In the final round, we need to see their strategic plan and he must do it before we can really judge him," says Christian Bolu, a bank analyst with autonomy, who believes that Solomon is "doing the right things" trying to move The business from slow-growing heritage businesses to faster-growing ones. "

Fixed income interest rate

Interest-changing trade was the problem the child at Goldman da Salomon took over. commodity department – known FICC – fell worse than peers 22 percent between 2016 and 2018, triggering criticism that Goldman had not understood worldly changes in business in recent years.

Goldman's FICC performance has improved in relative to other Wall Street banks over the past two quarters, partly due to the bank's low base, while Salomon and his team have promised to reshape the FICC for today's opportunities, not earlier years concrete information about how this will happen has been small.

On Monday's earnings call, leaders talked about exploiting the technology across the FICC business, cutting resources to underperform segments, and investing in more promising business. "It's still not clear," Mayo said, claiming that while Goldman "rattled about a dozen sites" for potential growth, he still didn't know what they were really planning to do.

Mass Market Revolution

As former trading director Blankfein represented the Goldman face in the FICC's heyday, Salomon – an amateur disc jockey – became the execution of the bank's mass market future. Goldman's recent announcement of a credit card with Apple is a step in that journey, although the financial impact of the tie-up is unclear. Mr Salomon also plans to expand Marcus, Goldman's only bank, and deeper into managing wealth for rich Americans.

In the investment bank, Salomon has accepted the Goldman work to serve smaller corporate clients, and announces plans on Monday for a team of 100 investment bankers focusing on companies worth $ 2 billion. Under Mr Solomon, Goldman also pushes into the cash management business, a youth-oriented business dominated by large commercial banks such as Citigroup, HSBC and JPMorgan Chase.

Investment Banking

The investment bank – and especially the advisory end of the business where Solomon built his career – has been a bright place since he began. In the first quarter, Goldman increased advisory revenue by 51 percent, to $ 900 million, far better than the 12 percent increase in advisory fees by rival JPMorgan over the same period. Goldman also rushed ahead of JPMorgan to cope with the number one spot for M&A and equity market revenues this year.

1MDB legacy

The fall of Malaysia's 1MDB money laundering and cutlery scandal has hung heavily over Solomon's early months at the helm. The US Department of Justice is investigating the bank, and Malaysia sues it for $ 7.5 billion over Goldman's role in helping the defunct state investment fund to raise $ 6.5 billion, of which billions were plundered. Mr Solomon on Monday said that while "no one will come to a decision on this sooner than we do," the bank did not know when to resolve the situation.

In February, Goldman announced that it held back millions of dollars in payments to three former leaders, including Mr Blankfein, "for more information available" on "ongoing government regulations" in the 1MDB scandal. Goldman allocated a $ 516m for litigation and regulatory issues in the fourth quarter of 2018, and the bulk of this is understood to relate to 1MDB.


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