The Goldman Sachs Group, Inc is a New York-based American global investment bank and financial services corporation. Among the services it provides includes:
- investment management
- securities
- prime brokerage
- asset management
- securities underwriting
It also offers institutional investors investment banking services.
The bank is a major dealer in the US Treasury security market and, more broadly, a distinguished market maker and is one of the world’s top investment banking companies by revenue. The Financial Stability Board considers it a systemically important bank. Goldman Sachs Bank USA, a direct bank, is also owned by the group.
The company was placed 62nd on the Fortune 500 list of the top US corporations by total revenue as of May 2020. Goldman Sachs was involved in a major controversy with 1MDB and paid a record penalty of over $2 billion under the FCPA, putting it among the top ten FCPA infractions as of 2021.
The Four Business Units of Goldman Sachs
Goldman Sachs has four operating business units, namely:
- Asset management
- Global markets
- Consumer and wealth management
- Investment banking
Asset Management
Asset management accounted for 18% of total business revenues in 2015. In August 2021, they announced that it had reached an agreement with NN Group to purchase NN Investment Partners and merge it with GSAM to expand its overseas activities. For €1.7 billion, NN Investment Partners, which manages $335 billion in assets, was purchased.
To a diversified collection of institutions and individuals worldwide, the Asset Management division provides investment consulting and financial planning services and investment products, mainly through separately managed accounts and intermingled entities, across all major asset classes.
Institutional clients, such as mutual funds, hedge funds, and pension funds, use the division for clearing, custody, financing, reporting, and securities lending. Spreads and management, and transaction fees are the primary sources of revenue for the department.
Global Markets
The four divisions of the segment include:
- Fixed income
- Currencies and commodities
- Equities
- Investing
Global Markets accounted for 37% of total revenue in 2017. The revenues and profits generated by the bank’s trading activities, both on behalf of its clients (flow trading) and for its own account (propriety trading), are included in this segment.
Consumer and Wealth Management
Goldman Sachs Personal Financial Management, and Goldman Sachs Private Wealth, Ayco, are all managed under Consumer & Wealth Management.
The following are included in Consumer and Wealth Management:
- Management and other fees
- Incentive fees
- Results from deposit-taking operations relative to the company’s wealth management division
- Accepting deposits and issuing unsecured loans through Marcus by Goldman Sachs, the company’s digital platform
- Results of offering loans through the company’s private bank
Investment Banking
Two aspects of investment banking include:
- Financial advisory
- Underwriting
Goldman Sachs is a renowned mergers and acquisition advising business, frequently topping Thomson Financial league tables for transaction sizes. By advising clients on avoiding unwanted hostile takeovers, they earned a reputation as a white knight in the M&A market.
Goldman Sachs was the only leading investment bank in the 1980s to have a rigid policy against assisting in launching a hostile takeover, which greatly enhanced the firm’s reputation among sitting management teams.
Investment banking accounted for 21% of the total company revenue in 2015.
Goldman Sachs COVID-19 Relief Efforts in India
Earlier this year, Goldman Sachs pledged an additional $10 million to help India fight against COVID-19 infections and deaths. Support will be provided to frontline health facilities in a few cities and will include vaccination efforts.
Frontline health facilities will include isolation care units for low-income communities and oxygen concentrators and generators.
Reduced Growth Anticipated in the United States in 2021
Economists at Goldman Sachs decreased their prediction for US economic growth in 2021, citing a larger-than-expected impact from the COVID-19 delta variant, which might lead to more supply-chain disruptions and higher prices.
They now expect the US gross domestic product to grow by 6% this year, up from a previous prediction of 6.4%. That’s less than the median forecast of 6.2% in a Bloomberg poll, which had a low estimate of 5%. Goldman raised its 2022 projection to 4.5%, up from 4.4% previously.
According to economists at Goldman Sachs, the delta variant has impacted growth and inflation. The delta variant and other setbacks are anticipated to drive up prices of supply-constrained durable goods through the end of the year.
According to economists, supply-chain issues have been troubling businesses for some time, prompting them to raise prices. They raised its inflation prediction for core personal consumption expenditures to 3.75% by the end of 2021.
Expansion with Hyderabad Office – India
Goldman Sachs expanded its back-office operations in India with a 1,300 seater office in Hyderabad. The bank will also hire an additional 560 people to expand by the end of 2021.
Several global banks and financial institutions have similar offices in various parts of the country, including Bengaluru, Pune, and Hyderabad, where local workers assist with international operations and innovation initiatives.
David Solomon, the CEO of Goldman Sachs, indicated that the Hyderabad office would function as an innovation hub for various industries.
By the end of 2021, the office in Hyderabad will grow to 800 personnel, with roughly 70% new hires. The Hyderabad office might have 2,500 employees by 2023, according to the company.
Goldman Sachs CEO: David M. Solomon
The CEO of Goldman Sachs is David M. Solomon, a position he’s held since 2018. He is also a member of its Board of Directors. In 1999, he became a partner at Goldman Sachs.
Under the stage name “David Solomon” (formerly known as DJ D-Sol), Solomon also makes electronic dance music (EDM) recordings for fun. He’s played in New York, Miami, and the Bahamas at nightclubs and music festivals.
David Solomon: His Leadership Style During the Pandemic
The coronavirus pandemic has recently tested Solomon’s leadership style. Employees were unclear of his leadership style, and stockholders didn’t know which direction he was taking the company. As a music DJ in his spare time, he was known for being direct, realistic, intuitive, and adaptable.
As soon as the pandemic hit, Solomon faced a leadership challenge, which was also an opportunity to show who he truly is.
Solomon has proven to be a skilled navigator during the global health crisis, quickly adapting to changes that took some of his bank’s larger competitors off guard. However, it resulted in an unintended mistake, highlighting the dangers of a fun-loving approach, which he had previously seen as beneficial when working with Goldman’s young workforce.
When New York City went into its first lockdown in March last year, most of the bank’s 40,000 employees immediately got sent home. Solomon approved the company’s purchase of landline phone systems and thousands of monitors in home offices. He also communicated with clients via Zoom, assuring them that Goldman would assist them in overcoming their challenges at no cost.
Goldman’s forward-thinking and embracing a work-from-home environment for his employees helped traders take advantage of increased market activity in the first two quarters of 2020.
In the first and second quarters, traders took advantage of increased market activity. Their efforts drove the firm’s stock and bond trading revenues to new highs, all while reducing disruptions and boosting employee loyalty.
David Solomon Shakes Things Up at Goldman Sachs
Solomon’s rhetoric appears to be calibrated to the mores of the changing banking industry, with roughly half of the bank’s employees under 30. As a yogi and music lover, he had already brought a fresh atmosphere to the position, ripping up the company’s conservative dress code and preaching the need of bringing one’s “whole self” to work.
In overseeing Goldman’s reaction to the virus, he’s also emerging as the face for a kinder era on Wall Street, where personal well-being can take precedent over profits, and expressing anxieties isn’t frowned upon.
Goldman Sachs (NYSE: GS) Latest Stock and Dividend News
As of August 26, 2021, Goldman Sachs’s stock price is $412.35.
Goldman Sachs has been paying dividends consecutively for the past ten years. The dividend yield is currently 2.03%. The dividend growth rate over ten years is 13.58%.
Financial Report Second-Quarter 2021
Goldman Sachs released its financial report for the second quarter of 2021. Here are a few of the highlights:
- The results showed the second-highest quarterly net revenues of $15.39 billion, second highest quarterly net profit of $5.49 billion, and second-highest quarterly diluted EPS of $15.02 per share.
- For the year to date, the company has ranked first in global announced and completed mergers and acquisitions, global equity and equity-related offers, common stock offerings, and initial public offerings.
- Investment Banking achieved $3.61 billion in net revenues in the second quarter of 2021, following record net revenues in the first quarter.
- Consumer & Wealth Management produced $1.75 billion in quarterly net revenues, a new high.
- Book value per common share climbed 5.6% in the first quarter and 12.2% in the first half of 2021 to $264.90.