Morning Coffee: Unexpected defenders of David Solomon as CEO of Goldman Sachs. Barclays seems to be paying some big guarantees
Following the weekend's nastiness about Goldman Sachs CEO David Solomon who stands accused of such things as bullying, using all caps emails and deprecating the climate concerns of students whom he allegedly belittled, people have come out of the woodwork. They are the defenders of Solomon. They think he's doing ok.
Most surprisingly, they include Lloyd Blankfein, the former CEO of Goldman Sachs who was said by the New York Times to have called Solomon to berate him and offer his services, and to have said of Solomon in the company of 15 partners in a hotel bar, "God, I wish he’d spend less time on the plane and more time making money.”
Blankfein told CNBC he didn't offer to return to Goldman Sachs and just wants to be helpful. CNBC says Blankfein expressed support for Solomon and declared his days of working "100-hour weeks" to be long gone; he's too busy playing golf.
Solomon's other surprise supporter is Mike Mayo, the Wells Fargo analyst and known scourge of underperforming bank CEOs. Solomon is simply being badmouthed by Goldman Sachs traders aggrieved about their diminished bonuses, Mayo told Bloomberg. “I think it’s like traders who were earning $6 million a year who got paid down last year to $4 million or something like that,” said Mayo. "They're going to the press with it."
Mayo said it's not the job of the Goldman Sachs CEO to be friendly and approachable (Blankfein himself was known to be harsh at times). “When I talk to investors, investors aren’t saying get rid of David Solomon," added Mayo, with the caveat that they might change their minds at any moment.
Why aren't investors eager for Solomon's displacement? Writing in the Financial Times, Rupak Ghose, former banking analyst and fintech executive, says it's because Solomon isn't actually doing badly. Excepting the failed consumer bank strategy, things are going well. Goldman's share price has risen 50% during Solomon's tenure, outperforming JPMorgan and the 20% rise in the KBW banks index. Goldman's financing business has trebled in size; its return on equity was a solid 13.8% in the first half of 2023; and the sales and trading business is thriving.
In a world where Credit Suisse has reminded everyone what a badly run bank looks like, Goldman's CEO is not doing that badly, says Ghose. Cut him some slack, even if he does send all caps emails and say allegedly inappropriate things. The next six months will be crucial.
Separately, in a year when M&A revenues have been poor and banks have been throwing out junior bankers, Barclays is still hiring senior people on what are likely to be large guarantees.
The British bank isn't commenting, but the fact that former Moelis technology banker Lee Counselman is joining Barclays in Boston after a circa six-month delay, suggests that he's been poached with a notice period rather than plucked from the street. Counselman will be foregoing his Moelis bonus, and Barclays is almost certainly generously incentivizing him to move.
Barclays has hired 20 or so senior bankers on what are thought to be similarly generous terms this year. The hiring spree was ironically prompted by its alleged failure to pay bonuses that had been verbally guaranteed to previous staff in 2022, many of whom have left this year.
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