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Following issues that have led to billions of dollars in losses, Goldman Sachs’ (NYSE:GS) Chief Executive David Solomon said the firm is considering “strategic alternatives” for its consumer business.
Speaking during Goldman Sachs Investor Day at its headquarters in New York City, Solomon, who did not specify what the options would be, stated that “sometimes we fall short.”
“Sometimes we don’t execute. But we always learn and adapt,” he added.
Unsecured lending has already been halted, while the bank’s Marcus consumer business was moved into its merged asset and wealth management arm last year.
Goldman Sachs President John Waldron and global head of Platform Solutions Stephanie Cohen reiterated Solomon’s comments, signaling the bank’s step back from its consumer business ambitions.
Goldman Sachs shares fell more than 3% Tuesday.
In an interview with CNBC, Solomon also warned that operating in China will get more challenging over the next couple of years, but he stated that the firm will continue to serve clients in the country.
“We are at a very tough place in bilateral relationship with China and my own view is it only gets tougher…It is a more ‘cautious’ time for investment in our own franchise,” explained Solomon.
Ahead of Goldman Sachs’ Investor Day event, Morningstar analysts said the bank’s “earnings could continue to be subdued for the next year or more, as the economic environment remains uncertain, which should pressure investment banking and asset management revenue.”
Meanwhile, Wells Fargo told investors in a note on Monday that while GS’ buybacks “exceed expectations,” all eyes were on Investor Day, and the big question is the degree to which Goldman can evolve its business model.
“Regulators continue to punish Goldman’s business model by requiring more capital (on a percentage basis) than for any other large bank. This means that GS needs to further demonstrate that it can evolve to the current environment,” wrote the analysts.
