Updated Jan 29, 2020

Goldman Sachs holds its first investor day

Photo: Ramin Talaie/Corbis via Getty Images

For the first time in its 151-year history, Goldman Sachs, the storied investment bank, opened its doors to investors and others for a day of presentations about its various business lines — and how it has been remaking itself.

Why it matters: David Solomon has been CEO for just more than a year, and under him, the bank has pivoted toward the mass market and making other strategic moves that could have a big effect on the evolution of modern banking.

The takeaway: For the first time, the firm released earnings targets and talked openly and in detail about its plans and aspirations — aiming in part to appease shareholders who want to see Goldman's stock price rise.

  • Among the targets: at least 13% return on equity within three years (vs. 10% in 2019) and an efficiency ratio — a measure of how well banks manage costs relative to revenue — of approximately 60% (lower is better; the figure was 68% last year).
  • Top priorities include expanding the 3-year-old consumer bank, Marcus, which has so far attracted 5 million customers, $60 billion in deposits and $7 billion in loans, which include balances on its Apple-branded credit card. (Those numbers are teeny in the world of big consumer banks.)
  • This year, Marcus will introduce wealth management and investment options; checking will come in 2021.
  • Other big GS plans: to expand payment processing for companies and other large institutions (a division called "transaction banking") and widen adoption of Marquee, an online data and analytics tool for institutional investors.
  • Goldman is hiring hundreds of financial advisers globally to ramp up its money management business.
  • The firm will spend $750 billion over the next decade on "sustainable economic growth."

"One Goldman Sachs," a motto and initiative that Solomon started on his first day as CEO, was a constant refrain among the day's speakers. In his opening remarks, Solomon called it a "firmwide effort to simplify the way to engage with our clients and deliver all of our capabilities in a more holistic fashion."

  • "The whole industry grew up in selling products in silos," Solomon said, adding that this mentality has to change.
  • "This is a very important pivot," not just for Goldman, but for the whole industry.

Yes, but: Some analysts asked Solomon whether tinkering with businesses like investment banking and M&A — where the firm is the market leader — made sense.

  • Solomon said Goldman was aiming for "more consistent and durable revenues."
  • And: "Investment banking is truly the front end of Goldman Sachs. And a key element of our firmwide strategy is improving the access that the rest of the firm has to this great corporate franchise."

Another question — addressed to a panel on sustainability — was how talk about enlightened policies squared with the Malaysian corruption scandal that cost the firm money and reputation last year.

  • Solomon said earlier in the day that the so-called 1MDB scandal made him "acutely aware of how the actions of a few” could mar a company’s brand.

The bottom line: The "new" Goldman, with a relaxed dress code and a CEO who moonlights as a D.J., says it's committed to transparency, long-term growth and putting clients first.

  • “Our purpose is to advance sustainable economic growth and financial opportunity," Solomon said. "We are proud advocates for capitalism.”

Go deeper:

Go deeper

Goldman banker banned from industry amid 1MDB scandal

Illustration: Lazaro Gamio/Axios

Andrea Vella, the former co-head of investment banking at Goldman Sachs Asia, has been banned from the banking industry for life by the Federal Reserve Board.

Why it matters: Goldman Sachs faces billions of dollars in fines for helping facilitate the "heist of the century" in Malaysia. Vella "engaged in unsafe and unsound practices," says the Fed, by failing to properly escalate concerns about Jho Low, the financier who masterminded the scheme and who is now a fugitive.

Varo gets long-awaited FDIC nod of approval

Illustration: Rebecca Zisser/Axios

The FDIC has given Varo Money its official seal of approval, according to Varo CEO Colin Walsh.

Why it matters: It's the crucial second step for Varo to become a national bank, following the Office of the Comptroller of the Currency granting its own preliminary approval back in October.

JPMorgan Chase to pull support for some fossil fuels

Illustration: Sarah Grillo/Axios

JPMorgan Chase said Monday that it won’t directly finance new oil and gas development in the Arctic and will significantly curtail its financing of the extraction and burning of coal.

Why it matters: JPMorgan is the world’s largest funder of fossil-fuel companies, according to a report by the Rainforest Action Network (RAN). The announcement follows similar moves by other big banks and investment firms, including Goldman Sachs and BlackRock.