Goldman Sachs Draws Up Comeback Plan
The once-undisputed champion of Wall Street draws up a plan to lift profitability in an attempt to quell shareholder concerns.
At the first investor day in its 150-year history, Goldman Sachs announced its aim to achieve a 14 percent return on tangible equity by 2022. The target includes a $1.3 billion cost savings during the next three years.
«We are planting seeds that will take time to mature and grow,» said Goldman's chief executive David Solomon in an investor meeting. The bank's share price, which lagged Wall Street rivals for much of the decade, fell 1 percent after the presentation.
Rivals Eat Into Margins
Margins at Goldman's bond and stock trading business, its biggest asset in the pre-crisis years, have been chipped away by fierce competitors such as hedge funds and other rivals.
To counter sub-par returns, Goldman is trying to expand beyond trading and investment banking into more bread-and-butter services such as current accounts, money management, and credit cards.
New Business Lines
The bank is targeting $100 billion of net inflows to its alternatives investment business and at the same time doubling consumer banking deposits. For its wealth management business, it hopes to add 300,000 individual clients.
It plans to establish a cash management business with $1 billion in revenues and $50 billion of deposit balances. Goldman's plan to add revenues from new business lines carried the greatest risks, according to UBS analyst Brennan Hawkens.
