Goldman Reportedly Readying Major Structural Overhaul

In a total reversal of his prior plans, Goldman Sachs’ CEO David Solomon appears set to unveil a major restructuring to the banks organizational structure.

The Wall Street Journal reports that the bank will split into three units.

According to people familiar with the matter, the Wall Street giant plans to once again combine its expanded asset management and private wealth businesses into one unit run by Marc Nachmann; and will also fuse its investment-banking and trading operations under one group run by Dan Dees, Jim Esposito and Ashok Varadhan.

However, most notably the money-losing consumer units will be broken up with Marcus, Goldman’s direct consumer-banking arm, to be part of the asset- and wealth-management unit; while the bank’s portfolio of FinTech platforms, specialty lender GreenSky, and its ventures with Apple and GM, will be hived off into a third division called Platform Solutions.

This may be due to the mounting losses from that group of companies as we noted previously, Goldman’s credit-card losses are soaring “well above subprime lender” peers.

Tomorrow’s earnings may shine a brighter light on that trend.

A major reorganization of Goldman Sachs, including the combination of its investment-banking and trading operations, would help the bank optimize and improve overall efficiency, according to Wells Fargo analyst Mike Mayo.

“A move such as this can provide more potential to better optimize the company and help GS better orient toward meeting its target to improve efficiency and continue its decade-long transition from a broker to a more efficient global bank,” Mayo wrote in a note to clients.

Additionally, Mayo added that he would like an update on its consumer banking business, as it “takes up a disproportionate amount of mindshare” given its relatively smaller size.

So, in summary, is CEO Solomon implicitly creating a good-bank (trading, asset/wealth management, and IB) / bad-bank (fintech) framework?