Goldman Sachs mulls 'strategic alternatives' for consumer business after missteps

© Reuters. FILE PHOTO: The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo

By Saeed Azhar and Lananh Nguyen

NEW YORK (Reuters) -Goldman Sachs Group Inc’s Chief Executive David Solomon said the company is considering “strategic alternatives” for its consumer business after admitting to stumbles over the business.

Solomon did not specify what those options would be.

The bank will aim to grow fees from asset and wealth management and try to make profits from a newly-created fintech unit as it laid out its priorities at the start of its second investor day.

The investment bank will outline the path to profit for its Platform Solutions unit, which houses Goldman’s transaction banking, credit card and financial technology businesses, it said.

The bank restated a longer-term target for return on tangible equity of 15% to 17% “through the cycle” and said it had “significant” room to grow market share for wealth management in the United States and globally.

Shareholders are awaiting more detail about its plans for Platform Solutions, formed after Goldman lost billions on its foray into consumer banking and reined in its ambitions. The pullback on costs could help the bank to meet its efficiency targets. 

“Sometimes we fall short. Sometimes we don’t execute. But we always learn and adapt,” Solomon told investors.

Chief Executive David Solomon’s performance and his plans for growth will also be scrutinized by investors and analysts.

Observers will focus on his plans to decrease Goldman’s reliance on trading and investment banking, which can be whipsawed by market volatility.

The bank has said it plans to slim down some alternative investments that weighed on profits last year.

“We will identify a $30 billion historical principal investment portfolio earmarked for sell-down and lay out a plan to reduce this portfolio to zero over the medium term,” the bank said.


“Earnings could continue to be subdued for the next year or more, as the economic environment remains uncertain, which should pressure investment banking and asset management revenue,” said Michael Wong, an analyst at Morningstar Inc.

After a solid performance in recent years, Goldman’s markets division could weaken in the short-to-medium term because “trading is a wild card,” he said.

Solomon also warned in an interview with CNBC that operating in China will get tougher over the next couple of years, but added that the bank would continue to serve clients in the country.

“We are at a very tough place in bilateral relationship with china and my own view is it only gets tougher … It is a more ‘cautious’ time for investment in our own franchise,” Solomon said. 

The relationship between the two largest global economies has worsened in recent months over Taiwan and the downing of a Chinese spy balloon that was found flying over the U.S. earlier this year.

Shares in the bank were up 0.2% in premarket trade on Tuesday.


Business Asia
the authorBusiness Asia

Leave a Reply