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Goldman Sachs hopes for bounce from first-ever investor day

(AFP)

Goldman Sachs will offer an unprecedented peek into its business Wednesday as it seeks to win over investors who have shown greater love to rival banks in recent years.

The prestigious investment bank, long known for secrecy, plans the first investor day in its more than a century-and-a-half history to tout a mix of initiatives that builds on its investment banking foundation while adding new ventures aimed at retail consumers.

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The investor day is “really about how we’ve continued to evolve,” said a person close to Goldman Chief Executive David Solomon, who replaced Lloyd Blankfein in October 2018.

The session will give Solomon and his team a chance to pitch investors on a new Goldman Sachs aimed more at the general public and competing directly with companies like JPMorgan Chase, Bank of America and Citigroup.

Goldman’s shift, launched three years ago, aims to lessen the firm’s exposure to the ups and downs of the financial markets.

A centerpiece has been Marcus, Goldman’s online bank offering which has been operational in the United States since 2016 and in Britain since 2018.

Goldman this summer launched a credit card with Apple, although critics have assailed the algorithm behind how the card determines credit lines as sexist.

Other initiatives aim to extend investment banking services to “middle market” clients, smaller companies that were once not in Goldman’s sights.

The growth potential of providing investment banking to smaller companies is “quite significant,” Chief Financial Officer Stephen Scherr said in November, describing efforts to target an additional 1,700 companies after establishing services for 1,000 medium-sized companies.

“We’re being more of a Goldman Sachs, in more places, to more companies.”

The firm has been shifting culturally as well, relaxing its button-down dress code for staff and unveiling more progressive policies on diversity.

Last week, Solomon announced that the company would require at least one “diverse” board member for US and European companies seeking to go public.

CFRA Research analyst Ken Leon expects Goldman executives to outline the potential opportunity during the investor day, but not necessarily spell out specifics on how much the new ventures will contribute to earnings in the near term.

For now, 50 to 60 percent of company revenues are tied to highly volatile businesses and “it’s going to take time” to build out the new projects, Leon said.

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