December 3, 2020

Seeking Clues in Goldman’s Succession Plan

The speculation may be more than idle gossip for bored bankers. Two friends of Mr. Blankfein, 56, say he has told them since last summer that he is exhausted from leading the company through the financial crisis and that he would consider stepping down when he could do so gracefully, without the move appearing to be anything but voluntary.

The choice of Goldman’s next chief could signal the firm’s direction and influence the broader thinking on Wall Street, where Goldman often sets the tone.

For decades, Goldman’s leaders came from its investment banking unit, which provided business strategy and merger advice to blue-chip companies. Mr. Blankfein, in contrast, was a commodities trader, and his ascension furthered the company’s makeover as a trading powerhouse.

To be sure, Mr. Blankfein may decide to stay a while, despite the chatter to the contrary. And as far as Goldman is concerned, Mr. Blankfein is not going anywhere. A spokesman for the firm, Lucas van Praag, declined to comment other than to note that Mr. Blankfein “says he has never felt so energetic and has no plans to retire.”

Even with its reputation tarnished by a Securities and Exchange Commission lawsuit last year, Goldman remains the world’s most powerful investment bank, with its own mystique on Wall Street. It is a training ground for government officials and hedge fund managers alike, and its powerful alumni network extends its influence.

While other eminent financial companies, like Merrill Lynch, were crushed by the collapse of housing prices and lost of tens of billions with a wager on subprime mortgage debt, Goldman actually spotted the threat early and made a bet against the housing market, racking up sizable gains.

Even as its traditional archrival Morgan Stanley struggles with a stagnant stock price, Goldman shares are up more than 20 percent over the last two years. When Goldman reports earnings Tuesday, analysts expect a profit of about $443 million, according to a consensus estimate from Thomson Reuters, although the latest results will be depressed by the bank’s plans to repurchase Warren E. Buffett’s $5 billion investment.

Like George Steinbrenner in his stewardship of the New York Yankees, whoever is at the top of Goldman cuts an outsize figure among peers. Two recent chiefs — Robert E. Rubin and Henry M. Paulson Jr. — went on to become secretary of the Treasury, and another, Jon S. Corzine, later was a senator from New Jersey, and then governor of the state.

What is more, Mr. Blankfein, who assumed the top job in 2006, is one of only two chief executives of major banks who were at the helm before the financial crisis and remain in charge today. Jamie Dimon of JPMorgan Chase is the other.

The top candidates to succeed Mr. Blankfein, according to three people briefed on the situation, are all company veterans, and they illustrate Goldman’s global reach.

One of them, Michael S. Sherwood, is British and oversees a broad swath of the firm’s international business from London. Another, J. Michael Evans, a Canadian and winner of an Olympic gold medal in rowing, is chairman of Goldman’s Asian business. (Mr. Sherwood and Mr. Evans are both vice chairmen of the firm.)

The final contender, Gary D. Cohn, Goldman’s president and chief operating officer, is Mr. Blankfein’s top deputy in New York.

No favorite seems clear, but that is not unusual at Goldman. Several former partners and analysts said they would be surprised to see an outsider selected. And whether or not Mr. Blankfein leaves soon — his urgency seems to have faded with the passing of the storm around Goldman, two people close to him said — he has been there long enough to justify focusing on a succession plan, analysts said.

Roger Freeman, a financial analyst at Barclays Capital, said Mr. Blankfein might wait to see his firm through the final negotiations with Washington over new regulatory rules for the banking industry in the second half of 2011, before handing Goldman to a younger team in 2012. “This has been an exhausting period,” Mr. Freeman said. “It would not be a surprising time to see a change.”

As the economy stumbled, Goldman’s success brought harsh public criticism, as lawmakers and even some clients complained that Goldman was no longer putting clients first.

Article source: http://feeds.nytimes.com/click.phdo?i=499e4b9743971e0c79e8c97c026f98f6

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