Goldman Reorganizes to Highlight Retail Shift

The changes to Goldman's business segments showcase "how digitally focused and consumer focused the Wall Street titan has become."
Matthew HellerJanuary 7, 2020

Goldman Sachs is reorganizing its businesses to highlight its shift to retail banking and make it easier for investors to compare its financial results to those of rival banks.

The revamp announced on Tuesday in a regulatory filing leaves Goldman’s investment banking division intact but creates three new business segments — global markets, asset management, and consumer and wealth management.

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The consumer management division includes the digital retail banking and credit-card operations on which Goldman has placed a major strategic bet.

The changes “should allow investors a cleaner look at how Goldman lines up with competitors” and could also highlight its Marcus online bank offering and the Apple Card, “which had previously been buried in [the investment and lending] division,” CNBC reported.

David Solomon, CEO, Goldman Sachs

Under CEO David Solomon, CNBC said, Goldman has been attempting to “transition from a somewhat secretive Wall Street trading house to a bank with more diversified revenue streams.”

As part of that shift, the bank has spent heavily on digital efforts and platforms, with technology-related expenses increasing 13% to $282 million in the most recent quarter. Marcus deposits stood at $55 billion but the business has lost more $1.3 billion since it was launched three years ago.

“By shifting Marcus and credit cards from the investing and lending segment to the new segment, consumer and wealth management, Goldman is positioning itself anew, showcasing how digitally focused and consumer focused the Wall Street titan has become,” said.

The investment and lending division also held such businesses as corporate lending, which now shifts to investment banking, and equity investments, which goes to asset management.

Goldman CFO Stephen Scherr had previewed the changes in September.

“We’ve been taking commentary and perspective from investors and from you in the context of where there’s been some frustration,” he told analysts. “I hear it loud and clear in the context of frustration with I&L, as an example, and so we’re going to guide ourselves in the direction of segments to meet some of what all of you have been asking for.”