Goldman Sachs decided to become more transparent for its clients
Goldman Sachs has not advertised the principles of its operations for more than 150 years, hiding them behind a multi-stage management system, Forbes reports, referring to the Financial Times. 20 years ago, the credit organization entered the stock exchange, but this did not make the company’s work more transparent. However, on January 29, the Bank’s CEO, David Solomon, will deliver a speech to shareholders, economists and journalists. Goldman Sachs will hold its first day of communication with clients and investors.
For the rest of the wall street organizations, such events are normal, but for the Bank-a revision of its traditions. Solomon decided to do this as part of the company’s changes. He plans to change the company’s benchmark. If Goldman Sachs previously specialized in trading and providing services for investors, now the range of products of the organization will increase: from account maintenance and money management to the issuance of credit cards.
Goldman is still the only Bank whose performance depends entirely on trading securities and bonds, but the profit from trading has halved over the past ten years. Competitors of the Bank JPMorgan and Bank of America have long revised their functionality and developed the banking retail and cash management sectors. Solomon has to adapt to modern trends.
Bill George, a former Board member, said that David Solomon came to Goldman Sachs to develop the company and build a growth strategy. George also clarified that to do this, you need to release new products to the market.
Most of Solomon’s decisions were more cosmetic in nature. For example, canceling the dress code for subordinates. Later, top managers moved closer to their subordinates: from 41 to 12 floors.
Over time, the decisions made by Solomon became more serious. Employees involved in the technological side of the product were moved to offices where they could work directly on it. Among other things, the Bank bought out United Capital for $750 million, expanding the client base and the list of services provided. Goldman Sachs also issued a credit card together with Apple.
The Bank’s management got rid of unprofitable areas and set a task for bankers: to work not only with rich clients.
However, innovations can lead to disagreements between bankers who are used to working with rich investors, and representatives of retail banking, whose task is to increase the company’s performance. A former partner of the Bank said that before in Goldman Sachs there was a situation of ruthless competition. Employees fought for the best contracts and thought about their benefits. Some specialists may have to leave under new circumstances.