Goldman Sachs Group Inc.’s Management hopes to make amends for the disappointing 2022. This week it presents fresh arguments to gain support from shareholders and appease any restlessness amongst its employees.
Executives aim to convince shareholders to recognize the immense value of Goldman’s $2.5 trillion asset and wealth management business. The new unit, referred to as AWM, after a year in which profits dropped 50%, and their consumer-banking strategy was dissected. The top leaders believe this unit is key to unlocking a higher worth.
Crucial Investor’s Day Ahead
The Wall Street Bank’s upcoming investor day comes at a critical juncture – weeks after its Management acknowledged its foray into consumer banking lost almost $6 billion since inception. This led to disapproving outcry among the Management and denting CEO David Solomon’s standing.
Investors and insiders are anxious to hear what plans are available for the remaining venture and the future roadmap.
Over the last year, Goldman Sachs saw a 7% growth in stock price, which has outshone the S&P 500’s decline. However, Goldman’s price-to-book ratio, determined by comparing the firm’s market value to its appraised worth, stands at 1.1. On the other hand, given its intense commitment to wealth management, Morgan Stanley’s price-to-book ratio is nearly 1.8.
A solution offered is to reassure investors and analysts that they need not worry. A mini Blackstone Inc. exists within Goldman Sachs, which can provide reliable profits during tough economic conditions using others’ capital.
Since taking over, Solomon has been aiming to correct AWM’s use of the bank’s balance sheet for investments. The decision has caused AWM’s profits to be inconsistent and volatile.
Goldmans Sachs 1990 IPO
In 1999, Goldman Sachs presented a prospectus for potential investors specifying increasing stable income with asset management. Nearly a quarter of a century later, the firm still chases that aim.
Last year, the leadership got embroiled in a longstanding debate over organization structure. The asset management arm catering to institutional customers was separated from the wealth department that served the planet’s most affluent. Then, just twelve months ago, they reunited the two divisions, leading to numerous changes in personnel.
AWM is overseen by Marc Nachmann, who has played numerous executive roles at Goldman Sachs since Solomon assumed the CEO position. Julian Salisbury, Chief Investment Officer, and previous Asset Management head, will provide insight into why Goldman’s investors can surpass the competition.
While Goldman’s Alternative Businesses met its 2020 fundraising objectives, division leaders will seek to capitalize on its Private Wealth division’s success. The unit recorded $7.4 billion in revenue, surpassing the Asset Management division in 2020, according to February 24 regulatory filing.
Failed Retail Banking Venture
Dan Dees, Co-head of Goldman’s Global Banking and Markets division, will demonstrate how they produced steady results during the upcoming investors meet. Beyond the strategy discussion, investors are interested in the board’s position on CEO David Solomon‘s performance.
However, analyst Mike Mayo has urged the board’s lead independent director to address these issues. Mayo has also raised questions regarding employee morale following the failed venture into retail banking business unit.
