En 2007, on the eve of a major financial crisis and as the first cracks were heard, “Chuck” Prince had his theory. The boss of the big American bank Citigroup compared his activity to the game of musical chairs. As long as the music continues, you have to dance, but beware of those who cannot find a place when the music stops. Many bankers, good dancers in the euphoria of the Stock Exchange, like Lehman Brothers, have experimented with the metaphor at their expense.
In 2022, David Solomon, the boss of Goldman Sachs, prefers the turntables to the dance. A good DJ, he rocked the audience at the famous Lollapalooza festival in Chicago, USA, in July. A performance that was not to the liking of all his fellow bankers, accustomed to more restraint. Arrived at the helm of the most flamboyant bank on Wall Street in 2018, David Solomon wants to dust off the image of the investment bank, tarnished by the 2008 crisis.
But as another major economic downturn looms on the horizon, with inflation surging and interest rates rising sharply, history seems to be repeating itself. After an exceptional year 2021 with the explosion of financial operations on Wall Street, the sky is darkening and you have to think about finding a chair before the music stops. The firm will reconnect with job cuts. Hundreds of employees starting next week, according to the New York Times.
retail bank
Because, despite its efforts, Goldman Sachs remains an investment bank whose major part of the wealth still comes from its investment bank. That of stock market traders and organizers of giant mergers and other IPOs. In 2022, in the United States, the amount of mergers and acquisitions fell by almost half and IPOs plummeted by 95% in value and 73% in number.
The company’s results followed, with investment banking revenue down nearly 40% in the first half of the year compared to 2021. And profits for the entire bank fell by 50%. To mitigate the influence of this activity and obtain funds cheaply, the bank launched in 2016 in retail banking for individuals, with the creation of Marcus, a tribute to the founder, Marcus Goldman (1821-1904 ).
But the bank is vegetating and was a little rolled in the flour by Apple, which allied with it in credit cards but left it aside when the Apple brand launched its split payment offer , very fashionable today. Analysts believe that only a major acquisition could change the game. But the shareholders of Goldman Sachs do not want it. Pushing others into marriage okay, but not for yourself. DJ Solomon stirs the crowds, but does not want to shake up its shareholders too much.