Goldman Sachs chief executive David Solomon stuck, without a clear lifeline

https://www.business-standard.com/world-news/goldman-sachs-chief-executive-david-solomon-stuck-without-a-clear-lifeline-123081300631_1.html

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One day in mid-June, Lloyd Blankfein called David Solomon (pictured), chief executive of Goldman Sachs. Solomon had not been expecting it.

Blankfein, a big Goldman shareholder and Solomon’s predecessor, had lost $50 million since January on his stake because of the bank’s sinking stock. He made it clear to Solomon that his patience was waning, according to three people briefed on the conversation. Blankfein offered to provide him with more hands-on advice, or even return to the firm in any capacity that might help, the people said.

Solomon, politely but firmly, turned Blankfein down.

It has been a slog for Solomon. Now in his fifth year as Goldman’s leader, he is struggling to steer the elite investment bank through a humbling stretch that has brought intense focus on his management style. 

In July, Goldman reported a collapse in profits, the result of a misbegotten foray into consumer banking that the firm is unwinding. Goldman has undergone three rounds of layoffs over the past year. Its stock trails that of its peers.

It isn’t just Blankfein who is fed up. Senior Goldman partners, former executives and investors have expressed frustration with the bank’s performance amid a turnaround plan that has yet to show results. It’s an unusual indication of unrest at a firm whose 400 or so partners have long observed an informal keep-it-in-the-family rule.

Goldman’s troubles have also raised questions about the future of Solomon’s leadership, according to current and former executives involved in deliberations about the firm’s future. Even his own friends lament that his side gig as an amateur DJ has become a needless distraction. Solomon has also attracted criticism for jet-setting trips, including to private resorts owned by a company in which he has personally invested.

Under Solomon’s tenure, Goldman has suffered a string of indignities. In addition to losing billions on its consumer banking business, its involvement in Silicon Valley Bank’s demise is the subject of government scrutiny. It has taken losses on investments in commercial real estate. And while it is hardly the bank’s fault that mergers and acquisition activity is down, by some metrics Goldman has surrendered its lucrative top spot as the go-to adviser to companies.