Goldman Sachs to explain trading strategy after investor pressure

Finance


The level of investor frustration is testing Goldman’s time-tested “black-box” strategy of disclosing little and letting results speak for themselves. The bank does not offer targets or forecasts, and its quarterly disclosures are much sparser than those of its peers.

President and Co-Chief Operating Officer Harvey Schwartz will break that tradition at an industry conference on Sept. 12, the people familiar with the matter told Reuters, and explain what management is doing to turn the bond-trading business around.

That comes after two months of attempts by Goldman to patch up relations with investors.

Executives including securities group co-head Pablo Salame have been meeting privately with investors and analysts to assuage concerns, the sources said.

The executives have explained how Goldman is trying to get investment bankers and traders to generate more revenue by working more closely together, sources familiar with the conversations said.

That attempt to soothe relations has not produced results. Seven investors who oversee a total of $3.3 billion in Goldman shares have told Reuters they are unsatisfied with management’s response so far.

The appearance of Schwartz in September may help turn the tide. A former co-head of securities and Chavez’s predecessor, Schwartz has developed a reputation for explaining Goldman’s approach to complicated issues, like capital rules, in a way that investors understand and appreciate.

In contrast Chavez – who took on his role in April – answered a long-running question about the viability of Goldman’s bond trading operation by saying: “It could be secular, it could be cyclical, doesn’t matter, who knows?”

The words of the CFO have extra weight at Goldman as CEO Lloyd Blankfein does not participate in quarterly earnings calls.



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