Goldman Sachs considers selling consumer platforms unit as it searches for stable revenue
Goldman Sachs is considering selling its consumer platforms business but remains committed to wealth management as it searches for a more stable source of revenue, boss David Solomon said today.
Speaking at an investor day on Tuesday, the bank’s chief executive said, according to reports, the bank was exploring “strategic alternatives” for parts of its consumer platforms business, including the possibility of a sale.
Consumer platforms is a new unit housing fintech and many of Goldman’s consumer banking products such as the Apple Card and Greensky.
Solomon said it would likely take another two years for the division to break even, which may not be enough to assuage investor concerns given it has lost nearly $3bn in three years.
However, Solomon reaffirmed his ambition to expand into asset and wealth management. The bank outlined plans for organic revenue growth in the high single digits over the next three to five years.
Its Marcus business was folded into the company’s asset and wealth management arm last year.
“The real story for growth for us is asset management and wealth management,” Solomon told CNBC earlier on Tuesday. “There’s a real opportunity for us to continue to make the firm more durable.”
The bank restated a longer-term target for return on tangible equity – a key measure of bank profitability – of 15 per cent to 17 per cent.
Solomon is attempting to stabilise bring Goldman’s revenues as the Wall Street giant is heavily dependent on investment banking revenue, which is incredibly volatile.
Last year was a devastating year for investment banking with deals volumes falling around the world. In the final quarter of last year, Goldman’s income fell two-thirds.
The banking giant has embarked on a large-scale round of cost-cutting, including cutting 3,200 workers in January due to the slowdown in dealmaking and the substantial costs from its foray into consumer banking.