Goldman Sachs is planning to undergo a massive restructuring that refocuses the investment giant in a bid to overcome investor’s concerns about the long-term health of the company, The Wall Street Journal reported Sunday.
The restructuring will reorganize the company into three units, one combining investment-banking and trading, one merging asset, wealth management and consumer banking, and one managing transaction banking and financial technology, the WSJ reported. Goldman Sachs has traditionally focused on investment banking and trading, but the volatility in those industries has left some investors wary of the banking giant’s long-term viability, prompting CEO David Solomon to refocus towards fee-based banking like consumer banking, wealth-management and transaction banking. (RELATED: ‘Until Something Goes Wrong’: Goldman Sachs Warns Investors High Rates Are Here To Stay)
Despite Goldman’s shares being worth more than competitors JPMorgan and Morgan Stanley, they are underperforming compared to investor expectations, the WSJ reported. By focusing on asset management for wealthy individuals or institutions, alongside a more traditional consumer banking model, Goldman would be putting a greater emphasis on reliable revenue sources valued more highly by typical investors.
David Solomon, chairman and CEO of Goldman Sachs, speaks during the Bloomberg Global Business Forum in New York on Sept. 25, 2019. (Kena Betancur/AFP via Getty Images)
The company’s existing consumer banking arm, known as Marcus, has struggled to gain a foothold in the market, and internal forecasts predict that the unit will lose more than $4 billion, according to Reuters, whose sources confirmed the WSJ reporting. Despite promising that the unit would offer a checking account by the end of the year, Marcus is yet to offer one, although it does offer loans, savings accounts and credit cards.
Goldman Sachs is set to fire approximately 500 employees this fall, as business slows and performance reviews that were suspended during pandemic-era policy return. The company is expected to announce the restructuring alongside third quarter financial results on Oct. 18.
Goldman Sachs did not immediately respond to the Daily Caller News Foundation’s request for comment.
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