Goldman Sachs prepares a significant restructure that will split its largest businesses into three divisions, with its investment banking and trading operations becoming one company, according to a source familiar with the situation.
In fact, the plans will be presented on October 18, along with Goldman’s third quarter earnings. According to the source, Marcus, Goldman’s consumer banking division, will be folded into the wealth sector, corroborating a previous Wall Street Journal article.
Furthermore, the corporation announced plans for four major units during its investor day in early 2020: investment banking, global markets, consumer and wealth management, and asset management. Indeed, this is the greatest reorganization since that time.
However, the Wall Street giant is making the move in an effort to increase the revenue from fee-based companies and reduce its reliance on erratic trading and investment banking profits.
In addition, the modifications also indicate that Marcus, the consumer division, is being demoted after Chief Executive Officer David Solomon declared his strong desire to establish a well-known digital bank.
Since he took over as CEO in 2018, Solomon has worked to increase Goldman’s presence in retail banking.
However, the consumer banking division, which debuted in 2016, has experienced delays and a lack of traction. A checking account that Marcus was supposed to introduce this year has still not happened.
Regarding an internal prediction made by the bank at the halfway point of the year, Marcus’ losses would increase to more than $1.2 billion in 2022, with a total loss of more than $4 billion, according to Bloomberg. Regarding the loss, Goldman opted not to comment.
Also, by the end of 2024, according to Solomon, the company might earn more than $4 billion in revenue.
As the bank’s annual report reported, net revenue in the consumer banking segment increased by 23% to $1.49 billion in 2021 as a result of greater credit card and account balances.
As stated by the bank, the consumer business has over 14 million customers, over $100 billion in deposits, and over $16 billion in outstanding loans and credit card balances.
