Goldman Names David Solomon As New CEO, Reports Higher Earnings -- 3rd Update
July 17 2018 - 11:46AM
Dow Jones News
By Liz Hoffman
Goldman Sachs Group Inc. said veteran investment banker David
Solomon would succeed Lloyd Blankfein as chief executive, setting
up a high-profile transition for a firm that is expanding well
beyond its Wall Street roots.
Mr. Solomon will take over Oct. 1 from Mr. Blankfein, who has
run Goldman since 2006. Mr. Blankfein will remain chairman of the
board until the end of the year, when Mr. Solomon will take the
title.
The move was announced together with the bank's second-quarter
earnings, which showed higher profit and revenues from a year ago.
Goldman reported $2.6 billion in profits on $9.4 billion in
revenue, both well above what analysts had expected and capping the
firm's strongest first-half since 2009. Earnings of $5.98 a share
were 50% higher than a year ago and better than the forecast
$4.66.
The announcement puts an end to a waiting game that had
captivated Wall Street for months. The Wall Street Journal reported
in March that Mr. Blankfein was eying an exit later this year, and
Mr. Solomon was named sole president soon after, raising
expectations of a speedy handoff.
Mr. Solomon will inherit a firm that has worked its way back
from near-death during the crisis but faces deep challenges. Its
trading business, once a money spinner, has fallen behind that of
peers as calm markets and tough regulations imposed after the
financial crisis took their toll. The firm's belated push into
consumer banking, where it is building a broad-based offering of
savings accounts, credit cards and wealth-management tools, will
take years to make a meaningful contribution.
"David is the right person to lead Goldman Sachs," Mr. Blankfein
said in a statement, praising his successor's track record of
developing new businesses and working to improve Goldman's
culture.
Quarterly gains were broad-based across the business, with each
of Goldman's four main divisions reporting double-digit revenue
gains from a year ago. But trading results fell short of investor
hopes that had rallied in recent days as rivals reported their
results. Goldman shares were down 1.5% in morning trading.
Goldman's investment bankers, Mr. Solomon's former realm, had
their third-best quarter on record, cracking $2 billion in revenue
for the first time in three years led by strong stock underwriting.
Corporate CEOs have been little rattled by the geopolitical turmoil
or headlines out of Washington and are continuing to do deals and
take advantage of open markets to raise capital. The firm said its
backlog of transactions had grown since March.
Goldman's shares are the worst-performing among big U.S. banks
this year, down 9%. Investors, who cheered bank stocks in the wake
of the 2016 presidential election, have turned less enthusiastic,
rattled by the potential for a protracted trade war and a narrowing
gap between short- and long-term interest rates.
Mr. Solomon will be the third Goldman CEO since the company went
public nearly two decades ago. The first, Henry M. Paulson Jr.,
went on to serve as U.S. Treasury Secretary under President George
W. Bush.
Mr. Blankfein, a longtime trader and lawyer who rose through the
firm's commodities business, guided Goldman through the financial
crisis and the public scrutiny that followed it.
"When I've been asked about succession in the past, it's always
been hard for me to imagine leaving," Mr. Blankfein said in a memo
to Goldman employees Tuesday. "When times are tougher, you can't
leave. And, when times are better, you don't want to leave."
Mr. Blankfein called Mr. Solomon a "terrific partner."
"I look forward to watching him lead Goldman Sachs for years to
come," he said.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
July 17, 2018 11:31 ET (15:31 GMT)
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