According to the news report by Bloomberg, Goldman Sachs finally selected its next Chief Executive Officer. After more than a year of speculation and maneuvering, the Wall Street major finally announced that David Solomon was going to take over as the company’s CEO from Lloyd Blankfein from October 1 this year.
For the next 76 days until Solomon formally takes over the role of CEO of Goldman Sachs Group Inc., he will have a freer hand in making expected but critical leadership changes now that Blankfein’s 12 year tenure as CEO of the bank is coming to a close.
In fact, even before this announcement was made, a restructuring in the company’s trading division in May had insiders speculating about Solomon’s leadership role in the near future.
Be it as it may, this only the second change leadership that Goldman Sachs has seen since it went public 20 years ago. Blankfein, on his part, is not leaving the company with troubles. In fact, he is has steered the bank’s key trading division back to even footing after its struggles in 2017 and now hands over a company that has entered new markets in the finance industry.
Blankfein sent a note to the staff at the company stating that he didn’t want to retire from Goldman Sachs, but it felt like it was the right time to do so. At 63, the CEO had admitted that he would need to move on before he was ready to do so.
According to veteran banking analyst Charles Peabody, once the selection process begins, a person becomes a lame duck. It is difficult to stay on and feel productive when the baton of leadership has already been passed on.
Solomon, at the age of 56, will be the oldest leader to take over the reins of the company in almost fifty years. He is also the fourth Chief Operating Officer under Blankfein, with the three before him leaving the company after they saw no further growth opportunities.
At the end of the year, Solomon is also expected to take over the role of Chairman of Goldman Sachs from Blankfein. Solomon’s ascension to the top spot was more or less confirmed when the company announced that he would be the sole president while his chief competitor, Harvey Schwartz, would be leaving the company.
The change in guard is taking place at a time when the company is diversifying away from its traditional trading operations and a traditional profit center towards becoming newer markets such as consumer lending.
Goldman Sachs’ shares has shot up when Donald Trump was elected President of the United States as markets hoped to see higher levels of trading activity as well as easier rules. However, those hopes have now faded away and the company’s shares are, in fact, down by 9% so far this year, which is the biggest drop among banking giants in the US.
This change in direction in the bank’s business strategy is evident in its second quarter results too, which were announced on Tuesday morning. While the company’s revenue from trading was up from a year ago, the business still only accounted for about 38% of the company’s total revenue. This is about 70% less that what it was back in 2007.
One of Solomon’s most important decisions in the next couple of months will be choosing a replacement for his current role. Candidates for this role are the co-leader of the investment banking division, John Waldron, and the head of the consumer and commercial banking division, Stephen Scherr.