Oct 16 (Reuters) – Goldman Sachs ( GSN ) is planning a major reorganization that will combine its investment banking and commercial businesses, while consumer banking will be absorbed into its wealth division, the Wall Street Journal reported. Sunday.
The move comes as the Wall Street titan tries to grow its fee-based businesses and break its reliance on fluctuating commercial and investment banking income.
CEO David Solomon’s desire to build a mass-market digital bank through the consumer banking division means Marcus will take a back seat.
The plans, which are expected to be announced within days, will see Goldman reorganize its large business units into three divisions, the WSJ reported, citing people familiar with the matter.
Goldman will combine its investment banking and trading businesses into one unit and asset and wealth management into another, the report said.
The combined investment banking and trading group will be led by Dan Deas and Jim Eposito, currently heads of Goldman’s global investment banking division, and Ashok Varada, currently co-head of the global markets division, according to a separate report from Bloomberg. .
Mark Nachman, co-head of the bank’s global markets division, will move to help with the combined asset and wealth management arm, the WSJ said.
Marcus will be part of the property and wealth management division, the report added.
Goldman, which will release third-quarter earnings on Tuesday, declined to comment.
Such an organizational overhaul of the bank comes shortly after global job cuts in September, which could affect hundreds of bankers.
Goldman reported a 48% drop in second-quarter profit, beating forecasts on flat income and commodity trading.
Delay on Marks
Like many of its Wall Street rivals, the bank is expected to report a sharp drop in third-quarter net profit due to a decline in investment banking revenue.
Goldman expects to post a net profit of $2.77 billion in the third quarter.
Given its strong operating environment, Goldman is closely reviewing all future spending and investment plans to make the best use of its resources, Barclays said in a recent report.
From the time he was at the head of the company, Solomon wanted to make it big in the retail business. But the consumer banking division, launched in 2016, is still struggling to gain traction, and is being pushed into asset and wealth management.
Marcus has experienced some delays — he has yet to launch a checking account he said he would launch earlier this year — and is reportedly burning through cash.
By mid-year, the bank had internally forecast losses of more than $1.2 billion by 2022, Bloomberg reported, meaning total losses would exceed $4 billion. Goldman declined to comment.
Solomon previously said the business could generate more than $4 billion in revenue by the end of 2024.
Consumer Bank expects net income to grow 23 percent to $1.49 billion in 2021, reflecting higher credit card and deposit balances, the bank said in its annual report.
Digital banking platform Marcus offered products such as loans, savings and certificates of deposit, and also credit cards through a partnership with Apple Inc ( AAPL.O ).
The consumer business serves more than 14 million customers and has more than $100 billion in deposits with cards and more than $16 billion in loan balances, the bank said.
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By Lavanya Ahire and Akriti Sharma in Bengaluru, Selena Lee in Hong Kong, Saeed Azhar in New York; Editing by Sherry Jacob-Phillips and Muralikumar Anatharaman
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