Lloyd Blankfein’s Big, Tricky, Game-Changing Bet

Almost a decade ago当它的蓝筹股和超级保健使高盛萨赫斯羡慕的华尔街 - 以及公众愤怒的对象 - 主席劳埃德·勒德·普莱德（Lloyd Blankfein）着名宣称他是“做上帝的工作”。

Goldman’s mission, which Blankfein argued served a social utility, spread far beyond boardrooms and family offices. So many of its former executives staffed top economic posts in Washington, Brussels, and emerging-markets capitals that the firm gained the sobriquet “Government Sachs.”

These days, Goldman also tends a humbler flock, providing unsecured loans to clients crushed by credit card debt. Blankfein even sets aside time for phone chats with these new customers — hospital workers, retired military officers, trailer-park residents — to ask what they think of the service. From his 41st-floor office in a curving glass tower overlooking New York harbor, he personally makes the calls, without identifying himself as Goldman’s boss. “They thought I was just a follow-up quality control guy,” Blankfein tells亚博赞助欧冠。“我真的很喜欢谈话。”

But humility goes just so far in explaining Blankfein’s newfound passion for Joe Sixpack. Goldman’s move into consumer credit — with an online loan and deposit platform it calls Marcus — is the most publicized part of an attempt to convince skeptical investors and analysts that it can adapt its business model to an era when large pure-play investment banks are melting away. Lehman Brothers and Bear Stearns are distant memories. Morgan Stanley is morphing into a wealth manager, while Deutsche Bank and Barclays wish they could. Of the bulge-bracket investment banks that existed before the global financial crisis, only Goldman Sachs is left standing with a largely intact trading and investment bank mix.

But recently, Goldman has lost its luster. Its investment bank still leads or hovers near the top of industry league tables, and its wealth and asset management unit generated record net revenues last year. The problem is that Goldman has come to be viewed as overly dependent on trading markets gone sour. In 2017 net income of $4.3 billion nosedived by more than 40 percent from 2016 earnings.

Blankfein isn’t fazed. Having grown up in some of New York’s toughest neighborhoods, he can display elbows-high reflexes and a wisecracking attitude in encounters with critics. Besides, as Blankfein points out, he faced far deeper investor doubts a decade ago in the midst of the financial maelstrom.

“It was November 2008 — Lehman fell in September — and I was asked whether we were going to stay in investment banking,” he recalls. “Then came 2009, which was our all-time best year.” Blankfein thinks the naysayers will be proved wrong once more by market swings that will again favor the Goldman model.

Goldman’s current troubles are mainly focused on its core fixed-income, currency, and commodities trading. Poor results in its fixed-income, currencies, and commodity division (FICC) are largely to blame for lagging revenues, profits, and valuation. And Goldman ended last year with its first quarterly loss since 2011. The red ink was the consequence of a onetime charge tied to the new tax law, but the financial headlines were still a shock.

Complicating the situation is talk on Wall Street that Blankfein, 63, is nearing the end of his reign after 12 years at the pinnacle. The speculation began in September 2015, when the firm disclosed that he was diagnosed with lymphoma. Following chemotherapy, he has been in remission. But in December 2016, Goldman named as co-presidents and co–chief operating officers Harvey Schwartz, 53, and David Solomon, 55, making them the two likeliest candidates to succeed Blankfein. And the lackluster financial results since then have led to guessing games among analysts about who will be tapped and how soon.

与此同时，Blankfein和Goldman都没有站立。在上九月开始的投资者的介绍中，该公司在年度收入中额外推出了一个50亿美元的计划 - 到2020年的16％。该计划旨在改变陷入困境的FICC业务，增加股票收入，增加消费者和公司贷款。它还旨在提高令人印象深刻的投资银行业绩与财务咨询和承保活动相关。

But the strategy hasn’t elicited excitement among investors and analysts. “While Goldman’s plan is credible, they may be overestimating the revenue opportunities,” says Brian Kleinhanzl, a banking analyst at New York–based investment bank Keefe, Bruyette & Woods. And the notion that at this late stage, Goldman is plunging into consumer finance leaves critics baffled — or worse. “It’s a horribly bad idea,” says Richard Bove, an analyst with the Vertical Group, a privately held investment bank headquartered in New York. “It’s a business in which Goldman has no experience whatsoever.”

幸运的是，对于高盛，其收入计划在其后面举行了有利的经济贸易风。美国陡峭的税收减税和重返强劲的全球经济增长，在金融服务业中提出了预测。目前的一年可能导致利率上升和市场波动，可以提供临时推动交易。如果发生这种情况，高盛将面临着投资者的压力较低，以拥抱更广泛，更加变革的战略，因为ArchRival Morgan Stanley与其蓬勃发展的财富管理单位完成。

Blankfein claims the prospect of better trading markets is already taking the heat off Goldman. At a Miami conference hosted by Credit Suisse in mid-February, a feisty Blankfein told investors that Goldman intended to funnel more capital into its FICC operations. “And nobody questioned me about it,” he says.

But even in an improving economic climate, it won’t be easy for Goldman to achieve its 2020 targets. Over the past decade FICC revenues have plunged across the industry because of low market volatility, regulatory restrictions on the use of bank capital for trades, and technology that has squeezed margins. Goldman’s Marcus consumer lending business is growing fast but is gambling that the credit cycle won’t end anytime soon. Plans to increase corporate lending must compete against larger, deeper-pocketed banks that offer a wider array of financial products for business clients.

投资者抱怨高盛忽略了通过s years ago to acquire a wealth management network that would have balanced its up-and-down trading operations and buttressed its investment banking activities. But Blankfein scoffs at Wall Street’s romance with wealth management, which he sees as directly linked to the lengthy bull market in equities that may be coming to an end. “Everybody now thinks wealth management is the be-all-end-all,” he says. “But what will it look like in a long bear market?

He and his management team are determined to prove that their basic business model remains as viable today as when it was crafted more than three decades ago. “We don’t see our business mix as written in stone,” says chief financial officer R. Martin (Marty) Chavez.

但也没有看到任何major acquisitions ahead that would take Goldman in a new direction. That kind of radical change of course last happened in 1981 when Goldman bought J. Aron & Co, a commodities trader, and merged it with its investment bank to create the current model. The deal also brought into the firm its future chairman and CEO in Blankfein, who got his start as a young commodities trader at J. Aron and remains a fierce champion of FICC trading.

So investors and analysts are left to ponder whether Goldman is looking beyond a short-term market lift and a possibly exaggerated longer-term enthusiasm for consumer finance. “It’s unclear if they know what they want to be,” says KBW’s Kleinhanzl.

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If that's the case, then it is one of the few times in its lengthy history that Goldman has lost its bearings. The firm traces its origin to the mid-19th-century arrival to America of Marcus Goldman, a Bavarian immigrant. Working first as a peddler on a horse-drawn cart and then as a shopkeeper, he became a broker of IOUs in lower Manhattan in 1869 — nowadays officially recorded as the year when the future financial powerhouse was born. The firm named itself Goldman Sachs & Co. in 1885, three years after Marcus’s son-in-law Samuel Sachs joined.

By the early 1900s, Goldman Sachs was a major corporate lender and investor. Despite its leading role in arranging IPOs over the rest of the century, the firm itself went public only in 1999. But more than any other listed bank, Goldman retains some of its previous private aura, most notably in its insistence on calling its 450 most senior executives “partners,” even though they own less than 6 percent of the company.

Blankfein came of age when Goldman was more likely to overlook somebody from his modest background. Born in the Bronx to working-class parents — his father was a postal clerk and his mother a receptionist at a burglar alarm company — he grew up in a public housing project in East New York, one of the city’s highest-crime districts. He attended college and law school at Harvard University on scholarship. In 1982, after four years in law practice, Blankfein joined J. Aron & Co., the commodities trading firm that had been acquired by Goldman only months before.

一开始作为伦敦办事处的黄金贸易商，普莱德·通过高盛越来越多的商品业务来领导FICC和股票部门。他是第一个J. Aron校友中的第一个达到高盛的上流队，因为交易成为该公司的最大收入发生器。自2006年以来，亨利保尔森放弃了该公司成为财政部秘书的董事长兼高盛首席执行官。

The global crisis jolted Goldman, which was deeply involved in the securitization of subprime mortgages. In November 2008 the firm received a $10 billion government bailout as part of the Treasury Department’s Troubled Asset Relief Program. But Goldman recovered far more quickly than most banks. By June 2009 it had repaid the bailout along with 23 percent interest.

That same year its market value exceeded Morgan Stanley’s by $50 billion. And also in 2009, Goldman’s FICC revenues peaked at $33 billion — equivalent to more than a quarter of the industry’s FICC total. Understandably, Blankfein concluded that Goldman’s best postcrisis strategy was to leverage its dominant market position, benefit from the low interest rates, and take advantage of the weakened competition to rake in ever-higher trading profits.

But trading was about to be hit hard by the regulatory reforms that followed the global financial crisis. Under the Dodd-Frank bill signed into law in 2011, banks are required to hold higher levels of capital and more liquid assets — as opposed to higher-yielding assets. This sharply limits their ability to leverage their balance sheets and has caused return on equity to tumble. Before the crisis, financial firms involved in trading were often leveraged by 30 times their balance sheet; now their leverage is half that.

“The inputs to ROE are coming down purely because of the new regulatory rules implemented over the past seven years,” says Christopher Lee, Boston-based portfolio manager of Fidelity Select Financial Services Portfolio. “To achieve the same ROE, you have to double your return on assets.”

Largely because of its heavy exposure to FICC trading, Goldman has seen its ROE plunge from 29 percent in 2007 to 10.8 percent a decade later. While still high, it may not be enough to sustain much longer the ROE premium Goldman has long enjoyed over its peers.

新的监管环境导致交易活动减少，特别是因为欧洲投资银行喜欢德意志，巴克莱和瑞士信贷继续缩小其FICC业务。但这并没有导致高盛指价的供需不平衡。

One explanation is the strong emphasis throughout the financial industry on bringing costs down through automation. Goldman has always been a leader in technological investments aimed at cutting expenses. Where there used to be row upon row of equity, fixed-income, and commodity traders, now computers and robotraders reign. The FICC headcount has declined by 20 percent since 2012. And with engineers accounting for more than a quarter of Goldman’s 34,400 employees, an MIT computer science degree has as much cachet as a Harvard MBA among new hires.

不幸的是，对于高盛，其余的金融业也被技术界到了突发，导致交易委员会合同。交易所交易的资金已经长出了大约十年前想象的范围。截至2017年底，ETF资产占3.4万亿美元。富裕的投资者仍然可以转向积极管理的公司，这承诺将他们的最佳研究和收费加上1％或2％加入退出费用。但越来越多的经济保守的婴儿潮一代选择了ETF，只收取便士的股票，让他们在几秒钟内免费退出。“这是ETF算法与华尔街研究，”博夫说。“Blackrock了解高盛没有。这就是为什么Blackrock在资产中管理超过6万亿美元。“（其中包括ETF的约1.75万亿美元）。

FICC revenues industry-wide shrank from $121 billion in 2009 to $68 billion in 2017, according to data analytics firm Coalition. They plummeted even faster at Goldman, which last year made only $5.3 billion in FICC revenues, less than a sixth of its 2009 record total. Revenue from commodities — the engine of Blankfein’s rise — tumbled by 75 percent from 2016, recording its worst annual performance ever. Overall in 2017, Goldman had net revenues of $32.07 billion, up from $30.61 billion the year before. But its $4.3 billion net earnings in 2017 were a 42 percent drop from 2016 income of $7.4 billion.

到目前为止，高盛的反应已在其FICC业务中加倍。将天然气和电力部门确定为大宗商品单位下跌的最大罪魁祸首，该公司今年投注更高，更挥发的能源价格将提高收入。该观点是与高盛着名的“长期贪婪”的着名令人信仰 - 意思是，如果它相信更大的回报可能是常态，该公司并不担心短期损失。

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虽然这很难为了使这些不利趋势，高盛正在寻找使FICC更有利可图的方法。作为其三年增长计划的一部分，由投资者讨论的一项倡议是改变其企业组合，以支持企业客户。高盛已经过度依赖于对冲基金和积极资产管理公司，这是由于市场的低波动性降低了其FICC胃口。但是，尤其是跨国公司，必须经常处理多种货币，波动的商品和固定收入工具。

Goldman is hoping that increased trading activity with corporate clients will help deliver a good chunk of the $1.5 billion it predicts from a revamping of its FICC business plus a rise in equities revenues. That would account for 30 percent of the $5 billion plan in additional annual revenues by 2020.

Goldman has long enjoyed close ties with the top managers of blue chips, who turn to the firm for broad financial issues. But the hedging and issuance decisions linked to FICC activity are taken at lower corporate ranks — by treasurers, assistant treasurers, and executives in distribution, supply, and procurement. “It involves extending relationships beyond the CEO and CFO levels,” says Chavez. “There was no good reason not to have been doing this before.”

除了支持交易活动全集tions, Goldman is hoping to increase its business lending. But both initiatives face tough competition from bigger entities. JPMorgan Chase and Citigroup are leaders in arranging trades and loans for corporate clients because they can offer them cash management, commercial payments, and other treasury services as well. “I don’t know how Goldman expects to compete without having the whole product suite required by corporate clients,” says Kleinhanzl. “Lending is only one piece of it.”

Goldman’s low deposit base compared to those of larger rivals is a further constraint on corporate lending. Goldman may have to turn to wholesale funding — at higher costs and longer durations — because it doesn’t have the institutional deposits of a Bank of America or Wells Fargo.

Increased lending and financing are supposed to contribute $2 billion — or 40 percent — of the $5 billion revenue enhancement plan. To the surprise of many investors and analysts, Goldman has rushed into consumer finance to cover much of this segment of the plan. In 2016 it launched Marcus, a personal loans and savings operation, named after Goldman’s founding patriarch. Marcus targets lower- and middle-income customers, in sharp contrast to the traditional Goldman clientele of ultra-high-net-worth individuals and multinationals. It is an online platform aimed at consolidating heavy credit card debts with unsecured loans of up to $40,000 at 11 percent to 13 percent annual interest for periods of three to six years.

By the end of 2017, Marcus had originated $2.3 billion in loans and gathered more than $17 billion in deposits. But investors worry about such aggressive growth in a business segment unfamiliar to Goldman — and possibly at a late stage in the credit cycle. Consumer finance is notorious for a checkered history of rocketing profits during periods of rapid economic expansion and plummeting losses in recessions. Goldman says it has resisted the temptation to go after less creditworthy clients for higher yields. The firm insists Marcus customers have solid repayment records.

That may be true in flush times, but it remains to be tested when the credit cycle and economy turn downward. “If you start charging customers 12 percent for loans, they can’t grow their income fast enough to repay you,” says Bove. “And we know there will be another recession someday.”

Blankfein坚持长期以来的悲观主义。在五年内，他认为，马库斯有可能通过为卡发行人收取的一半处罚的客户利率主导信用卡债务的再融资。“大银行没有动力这样做 - 提供直接与信用卡竞争的产品，”他说。

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While FICCtrading has been a drag on Goldman’s earnings and consumer finance is still more dream than reality, Goldman’s investment bank continues to shine. For many large corporates, the firm and its leader remain the go-to choices for M&As and capital raisings. “Goldman has an exceptional read of the market,” says Ana Botín, executive chair of Spain’s Grupo Santander, who turned to the firm to help arrange a €7.5 billion ($8.5 billion) overnight share sale in 2015 to shore up her bank’s capital position. “It was my first transaction as executive chair, and knowing and speaking to Lloyd, who understands perfectly the risk-return equation, was a huge plus.”

Last year, as usual, Goldman was at or near the top of the league tables. It ranked first in mergers and acquisitions, as well as in worldwide equity and equity-related offerings and common-stock offerings, according to Dealogic. The investment banking division produced net revenues of $7.37 billion, its second-highest annual performance, with record underwriting and strong financial advisory results. The firm’s leveraged finance business brought in record net revenues in debt underwriting. “The company is an extraordinarily good investment banking firm,” concedes Bove, otherwise an acid critic of Goldman’s management team and overall strategy.

Goldman’s wealth and asset management franchises, grouped under its investment management division, also delivered sterling results. They generated a record $6.22 billion in net revenues and increased AUM by 8 percent over 2016 to a record $1.49 trillion.

The investment banking and management divisions are supposed to contribute most of the remaining $1.5 billion in the $5 billion annual revenue enhancement plan. And what appears to be a favorable macro climate this year should keep both businesses on their upward course. Global economic expansion and tax cuts mean more money for M&A and IPOs.

减税也可以倾斜favo的竞技场r of Goldman against European rivals. “It gives U.S. banks a significant competitive advantage over European rivals,” says Davide Serra, London-based CEO and founder of Algebris Investments, a financial sector–focused hedge fund. That’s because the big American banks make two thirds of their earnings in the U.S. and will now be taxed at a much lower rate, while the European banks earn most of their income in their home countries, where their tax rates remain unchanged. Goldman took a onetime $4.4 billion hit from the tax reform that largely accounted for its fourth-quarter loss last year. But going forward it expects the reduced tax rate to generate high single-digit percent increases in earnings.

While lower taxes and a rising economic tide lift all boats, Goldman may benefit less than its more diversified U.S. rivals. For example, Morgan Stanley, after completing its acquisition of brokerage Smith Barney from Citigroup in 2012, has shifted so far toward wealth and asset management that together they account for about half of the firm’s net revenues. “I don’t know if you can still call Morgan Stanley an investment bank,” says R. Burns McKinney, Dallas-based portfolio manager of NFJ Dividend Value investment strategy at Allianz Global Investors. “But they continue to generate solid returns on the investment banking side.”

And investors are rewarding Morgan Stanley for its balance between investment banking and wealth management. The firm’s $101.4 billion market capitalization has overtaken Goldman’s $100.6 billion market cap.

Blankfein insists investors will once again favor Goldman because the market forces behind its model are timeless. “We buy things from people who want to sell and sell things to people who want to buy, when in the real world, those buyers and sellers don’t usually match up,” he says. “Those things have been going on since the Phoenicians.”

And he turns to a more recent past as prologue for a bright future in consumer finance. “In It’s a Wonderful Life you had a consumer bank that made 500 loans,” says Blankfein, referencing the Frank Capra film classic starring Jimmy Stewart as small-town banker-hero George Bailey. “But it’s entirely different if you are making five million loans, with algorithms, risk management, digital distribution. That’s right in our wheelhouse.”

Maybe Lloyd Blankfein will get to play George Bailey in the IMAX remake.