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David Solomon gathers his inner circle as he prepares to take the helm at
Goldman Sachs
Group Inc., replacing the bank's chief financial officer and installing a longtime lieutenant as his senior deputy.
Goldman is expected to appoint John Waldron as president and Stephen Scherr as new chief financial officer, replacing Martin Chavez, according to familiar people. The reshuffle shows that Solomon has put his footprint on the firm he will soon launch and represents a triumph of Goldman investment banks on its traders, who have been on the heels since the crisis.
Goldman's board is scheduled to meet on Thursday to discuss promotions, which will take effect Oct. 1, when Solomon will take over from outgoing chief executive Lloyd Blankfein.
Mr. Chavez, a computer engineer who has crossed the commercial arm of Goldman, will return to this division as one of three co-leaders, said some people. He approached Mr. Solomon earlier this summer and suggested the move, according to one of the people. Wall Street banks rely heavily on coders as trade intensifies, and Chavez has been a champion of Goldman's efforts to open up its internal technology to customers.
He stepped down as Chief Financial Officer after an 18-month term in which Goldman came across the Federal Reserve's annual stress tests and disappointed investors by reducing his share buyback. During the quarterly conference calls, Chavez's responses sometimes failed to reassure shareholders, disconcerted by Goldman's business problems and his expansion into new business.
Mr. Waldron, 49, co-directs Goldman's banking division, which generates about one-third of the company's earnings. Mr. Scherr, 54, oversees its implementation in the Main Street banking sector. The two men got their hands at Goldman's capital markets, helping businesses to raise money and in the same place as Mr. Solomon started.
Their promotions would put investment bankers in each of Goldman's most important roles, for the first time in decades, limiting a shift in power since the crisis. Mr. Blankfein, a former merchant, grew in the 2000s when this business was booming. Along the way, he promoted fellow business people, including Gary Cohn, Harvey Schwartz and Mr. Chavez, in the Executive Suite.
But trading revenues have fallen sharply since the crisis and Goldman's focus has shifted to its investment bankers, who trade mergers and offer stocks and bonds. Messrs. Cohn and Schwartz both left, and two senior business executives close to Mr. Blankfein retired earlier this year.
The promotions of MM. Waldron and Scherr rose quickly for both men. Four years ago, Mr. Scherr was the head of Goldman's strategy, a backwater mission for a bank that rarely made big changes or drove out major acquisitions. Mr Waldron had just returned from a stay in London and had been tasked with relaunching a failed customer coverage effort.
With their elevations, they will join a rarefied circle. Despite its post-crisis challenges, Goldman remains an elite firm, with a hold on Wall Street and Washington, which guarantees its leaders a voice in urgent business.
Mr. Waldron has been one of Mr. Solomon's closest confidants for more than two decades. The couple worked together at Bear Stearns in the 1990s, and Mr. Solomon, who came to Goldman in 1999, quickly recruited his protégé. They have neighboring vacation homes in the Bahamas and travel in overlapping social circles, stacked with financial and commercial bigwigs.
Mr. Waldron covered the media and telecommunications companies and was promoted to his current position in 2014.
Mr. Scherr is not personally close to Mr. Solomon, but holds the keys to Goldman's consumer banking and commercial banking activities, a top priority for the firm. Like Waldron, he spent his early years at Goldman as a banker for media and telecommunications companies, and then oversaw his operations in Latin America.
He is now leading Goldman's efforts toward the main street businesses, including credit cards, commercial banking and wealth management – a major bet that the company can succeed in areas where it has few assets. 'experience.
The rise of MM. Scherr and Waldron will open lower seats at Goldman, although they are not supposed to be filled immediately. Daniel Dees, who currently runs the technology information bank in California, believes that one of the top candidates for the position of co-head of investment banking at Waldron is the one who knows the situation best. Scherr's successor is less obvious and Solomon may be looking to recruit from outside.
Write to Liz Hoffman at [email protected]
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