Goldman plans a comprehensive reorganization, combining investment banking and trade

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It plans to split its largest business into three divisions, and make one of the largest adjustments in the history of Wall Street Corporation.

Goldman will collect it Leading investment and commercial banking into one unit, with asset and wealth management merging into another, people familiar with the matter said. Marcus, Goldman’s retail banking armit will be part of the asset and wealth management unit, people said.

The third section will feature transaction banking, the bank’s portfolio of FinTech platforms, Specialized Lender GreenSky and its projects with

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people said.

People said the reorganization could be announced within days. Goldman Sachs is due to report third-quarter earnings Tuesday.

It’s unclear how the transformation will shake up Goldman’s senior leadership team, the people said, although at least a few executives will have new roles. They said Mark Nachman, the company’s co-head of trading, will be sliding in to help manage the joint asset and wealth management arm.

The reorganization is the latest step in CEO David Solomon’s push to shift Goldman’s center of gravity toward businesses that generate flat fees in any environment. It also reflects the company’s struggle to overcome investor skepticism and even among some of its executives about Tamouha for Personal Banking Services.

The company’s acumen in trading and investment banking has been Goldman’s calling card for decades, turning in huge profits when markets favored risk-taking and aggressive deals. But investors have often dismissed those successes, arguing that they are difficult to maintain when market conditions change. In recent years, Goldman has sought to increase the focus of its trading arm on customer service.

After the changes, Goldman’s organizational chart will look more like its peers.

A slide presentation from Goldman Sachs’ 2020 Investor Day provided a glimpse of what the combined banking and trading business will look like to its peers. At Goldman, the combined group would have had a 9.2% return on equity in 2019, the best

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Bloomberg News previously reported that Goldman was planning to restructure its retail banking arm and was considering combining its asset and wealth management business.

Goldman stock struggle to keep up With its competitors, at least by one measure. The company was trading at 0.9 times book value as of June, according to FactSet. That’s compared to 1.4 times at Morgan Stanley and 1.3 times at JPMorgan.

Goldman sought to narrow the gap through business promotion that require higher ratings on Wall Street. Managing the money of the wealthy and overseeing pension funds and other institutions with deep pockets is more profitable than other financial services, and usually does not put a company’s balance sheet at risk. For many investors, traditional consumer banking – taking deposits and making loans – is more predictable.

Goldman Sachs has invested heavily in building its consumer bank, and consolidating the unit into its asset and wealth management arm will create more opportunities to provide banking services to wealthy individuals.

Earlier this year, the bank said it aims to bring in $10 billion in asset and wealth management fees by 2024.

write to Justin Baer at [email protected]

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It appeared in the October 17, 2022, print edition as “Goldman to Join Companies into Three Divisions”.

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