Solomon will succeed Lloyd Blankfein as the firm’s chief executive officer on Oct. 1, the bank said in a statement Tuesday. Blankfein will step down as chairman at the end of the year, when Solomon will also take on that role. Solomon’s stature as the heir apparent was cemented in March, when the firm announced that he would become sole president while Harvey Schwartz — his chief rival for the job — would leave the company.
Having a set timeline potentially gives Solomon a freer hand in carrying out critical leadership changes across the firm that have been expected after Blankfein’s 12-year-run as the CEO. The handover is taking place as the firm diversifies away from its trading operations, a traditional profit center, and pushing deeper into newer areas like consumer lending.
That change was evident in the firm’s second-quarter results, also announced Tuesday morning. While trading revenue bounced back from a year earlier, that business accounted for about 38% of overall revenue, down from almost 70% in 2007.
While Solomon’s status as the next chief has been apparent for months, less clear was how long he’d have to wait to take the role.
Blankfein, 63, has previously admitted that he’d have to give up the top spot before he was ready to move on, and has said that Solomon would benefit from more time in the president job. When Solomon, 56, does take the reins, he will be the oldest new leader at the firm in almost 50 years. Solomon is the fourth chief operating officer under Blankfein’s reign, with the previous three having exited the firm having seen their path to the top curtailed.
Solomon joined Goldman Sachs as a partner shortly after the firm went public in 1999, and has since climbed the ranks through its investment-banking division. He ran that unit for a decade and led a push into debt underwriting, a business that had record revenue last year and contributed almost 10 percent of the firm’s total.
Solomon grew up in Hartsdale, New York, and studied at Hamilton College. After a stint at Drexel Burnham Lambert, which overlapped with Mike Milken’s time there, he rose to prominence at Bear Stearns where he helped run the junk-bond desk before being lured to Goldman Sachs.
Goldman Sachs adopted the status of a trading powerhouse in the early years of Blankfein’s tenure, earning the envy of competitors. But that changed in the aftermath of the global financial crisis, as Goldman Sachs quickly became the poster child for Wall Street’s misdeeds in the eyes of the public.
That took a toll on Blankfein as he was hauled in front of congressional committees and was tasked with explaining Goldman Sachs’s actions during the crisis. Lawmakers lambasted the firm for taking steps to limit its losses on the housing rout, while continuing to sell mortgage-linked products. As the public continued to heap scorn on the firm, Goldman’s favorability ratings plummeted even among the financial elite. Blankfein, as the face of the firm, bore the brunt of the attacks.
“Lloyd successfully led Goldman Sachs through a once-in-a-75-year financial storm and its bitter aftermath,” said Hank Paulson, who was Blankfein’s predecessor before becoming U.S. Treasury Secretary. “He has grown in stature to become an industry leader. His keen intellect and sense of humor have made him an effective spokesman for his industry and his firm.”
Since the crisis, the firm has had to lean more on its investment banking group — where Solomon hails from — and less on the trading franchise. The trading division’s outsized money-making ability has been curtailed in the aftermath of the crisis under the weight of new regulations.
Goldman Sachs rallied after Donald Trump’s election on the hope of more trading activity and looser rules. That optimism has faded, with the firm’s shares dropping TK10TK percent this year, the most among major U.S. banks.
One of Solomon’s key decisions will be picking replacements for his current role. Candidates include John Waldron, co-head of investment banking, and Stephen Scherr, who leads the company’s consumer and commercial banking division.
Solomon will also be responsible for determining the new leadership for the trading division, which lost its two senior-most leaders this year. And analysts and investors will keep a close eye on the resources he devotes to help the bank accomplish its target of identifying $5 billion in new revenue opportunities by 2020.
Solomon and Schwartz had been competing for a shot at the top job since being promoted to co-presidents in late 2016. That happened after Gary Cohn, Blankfein’s longtime No. 2, left to join President Donald Trump’s administration.
Solomon will likely be the first person to lead a major bank while flaunting his credentials as an electronic music disc jockey, a gig he has continued to embrace even after his status as heir-apparent was established back in March.