Finance

New management at Goldman promises 'front-to-back' review of all units to boost investor returns

Key Points
  • The investment bank, now led by David Solomon, has undertaken a review of its four main divisions to boost returns, incoming Chief Financial Officer Stephen Scherr says. 
  • Investors in the New York-based firm have done worse than holders of other banks, including J.P. Morgan, which has much bigger retail and corporate banking businesses.
  • Goldman said last year that it planned to boost revenue by $5 billion by broadening its banking and trading client base, finding growth in smaller markets and pushing into retail products like personal loans.
David Solomon, co-president and co-chief operating officer of Goldman Sachs Group Inc., gives a thumbs-up during a discussion at the Goldman Sachs 10,000 Small Businesses Summit in Washington, D.C.,
Andrew Harrer | Bloomberg | Getty Images

Goldman Sachs' new management team is taking a hard look in the mirror.

The investment bank, now led by David Solomon as of this month, has undertaken a review of its four main divisions to boost returns, incoming Chief Financial Officer Stephen Scherr said Tuesday on the bank's third quarter earnings call. Investors in the New York-based firm have done worse than holders of other banks, including J.P. Morgan, which has much bigger retail and corporate banking operations.

"We are reviewing all our businesses, front-to-back, to ensure that our people and our financial resources are optimally deployed," said Scherr, who starts as CFO next month. "Our objective here is clear: to improve shareholder returns."

Goldman said last year that it planned to boost revenue by $5 billion by broadening its banking and trading client base, finding growth in smaller markets and pushing into retail products like personal loans. Scherr said he will provide an update on that effort in November.

The company is searching "for new ways to grow our businesses while improving our operating efficiency for the long term," Scherr said.

That may include small-to-medium sized acquisitions in the bank's new consumer finance division, as well as purchases in the investment management business, Scherr said.

The start of Solomon's tenure promises to bring other changes. There have been reports that he will increase the company's transparency to analysts and investors, and the firm appears to be headed in that direction. The bank will better define business priorities and give more information on metrics it will use to measure progress, Scherr said.

Unlike his predecessor Lloyd Blankfein, Solomon looks to be a regular participant of the earnings calls. He'll join the calls starting in January for fourth-quarter results, Scherr said.

Goldman shares were 1 percent higher on Tuesday following its earnings report. The bank's shares have sunk 16 percent this year through Monday, compared with the 6.7 percent decline of the KBW Bank Index.