Chaos Breaks at Goldman Sachs As Bank Faces New Losses
Goldman Sachs is currently facing new losses as the bank reports an alarming -58% drop in profits this year.
Additionally, Business Insider reports that the CEO was hit with a wave of high-profile defections that bring the number of partners who have left under Solomon to 90.
On Friday, Goldman Sachs lost two partners; Lisa Opoku and David Rusoff — just days after losing two high-ranking members of its asset and wealth management unit; CIO Julian Salisbury and Takashi Murata, co-head of Asia Pacific private investing and global co-head of real estate.
“Goldman’s partners are its highest-ranking executives under C-Suite. They hold a lot of sway and prestige — both inside the bank and in the wider world. Goldman has rejected claims that departures have been high, including at this year’s Investor Day in February, when Solomon said that turnover was at a five-year low,” said Business Insider.
Reports state that Solomon, the third person to lead Goldman Sachs since it went public in 1999, has been operating the bank more like a publicly traded company than the partnership it was for most of its 154 years.
In June, the bank lost semiconductor investment banker Tammy Kiely, and in May rates trader Frederick Baba, and Dina Powell McCormick, a former government official who ran the bank’s sovereign business and sustainability efforts also ditched Goldman Sachs.
Opoku worked as global head of the Goldman Sachs Partner Family Office, which oversees the firm’s wealth management offerings for current and retired Goldman Sachs partners, managing directors, and alumni. She is leaving after 20 years at the bank according to the banks head of wealth and asset management unit.
David Rusoff, general counsel of Global Banking & Markets, is leaving Goldman Sachs after 23 years to work for Ken Griffin of Citadel Securities.
Also Read: Banks Are Now Closing Thousands of Accounts Daily
Goldman Sachs Profits Drop Drastically
Goldman Sachs profits have dropped -58% from a year ago, to $1.2 billion.
The company brought in $3.08 per share in the second quarter, falling short of the $3.16 per share analysts had expected, according to FactSet. Goldman is the only large bank so far to miss on earnings per share estimates.
This marks the worst quarterly profits since early 2020, during the pandemic-induced recession.
The poor report will likely increase scrutiny of CEO David Solomon who has been under pressure for overseeing the bank’s shrinking consumer business, says CNN.
“Our results were impacted by the challenging macro environment and in particular headwinds facing our specific mix of businesses,” said Solomon on Goldman’s earnings call in July.
“Activity levels in many areas of investment banking hover near decade-long lows and clients largely maintained a risk off posture over the course of the quarter.”
“We’ve been very underimpressed by management’s execution and vision in regard to the consumer side of [Goldman Sachs],” said David Wagner, portfolio manager at Aptus Capital Advisors, on Wednesday.
“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.”
Shares of the bank are down more than -5% in the past six months.
Also Read: US Banks Are Freezing Accounts and Withdrawals in New Scandal
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