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Person in the News David Solomon David Solomon, a smart operator prevails at Goldman Sachs

The new boss springs from and vows to get a grip on the trading arm

Laura Noonan and Ben McLannahan JULY 20, 2018

At 1.45pm on Tuesday, as was deluged in rain, David Solomon got into a car outside Goldman Sachs’ headquarters. Although the 56-year-old had been confirmed as the next chief executive of the venerable bank less than six hours earlier, neither bad weather nor the promotion could keep him from a client waiting uptown.

“David is perhaps the most client-focused banker on the Street,” says Glenn Hutchins, a private equity investor who counts Mr Solomon as a longtime friend and adviser.

Outside Goldman Sachs, the investment banker is best known for moonlighting as a DJ, patronising top restaurants, amassing a lavish wine collection and a love of adventurous pursuits such as kitesurfing. Internally, bankers talk of his intensity and an “always on” mentality; attributes that won him key clients over the years such as Sheldon Adelson, the owner of the Las Vegas Sands casino, and Disney’s Bob Iger.

On a recent Goldman podcast Mr Solomon said he sees life as “a marathon not a sprint”. He added: “If you can’t find a way to have passions and pursue those passions . . . it’s just harder to have the energy to keep on doing this and to keep moving forward professionally.”

Mr Solomon was a commercial-paper salesman at Salomon Brothers and Drexel Burnham Lambert before joining Bear Stearns in 1991. There he developed a reputation for raising money for companies with poor credit ratings. In 1999 he switched to Goldman as a partner — an unusual move for the group, which tends to develop its own. It was also a demotion in title for Mr Solomon: from head of investment banking at Bear Stearns to co-head of leveraged finance at Goldman.

Recommended “I said ‘David, why did you do it?’,” Lloyd Blankfein recalled in a town-hall meeting with the bank’s managing directors on Tuesday morning. “David said . . . that if he was going to keep investing in his career like he was, he wanted it to be in the best place that would have the best pay-off for himself over the long term.”

https://www.ft.com/content/d5d3b1a6-8b6a-11e8-b18d-0181731a0340 1/3 2.1.2019 David Solomon, a smart operator prevails at Goldman Sachs | Financial Times Unlike Mr Blankfein, whom he succeeds in September as chief executive and as chairman at the end of the year, Mr Solomon springs from Goldman’s investment banking side, rather than its once world-beating trading division. As such, he tends to be focused on spending time with big clients, trying to impress on them the breadth and scale of Goldman’s capabilities.

Mr Solomon is a smart choice, says Gary Goldstein of Whitney Partners, a search firm. “It’s gone full-circle from the 1970s and 1980s, when human capital and relationships drove a lot of businesses. In the ’90s and 2000s it was all about trading but now everyone has access to the same technology and the same capital. If it’s about a big fight for talent again, David’s very good at it.”

Mr Solomon has broad support among Goldman’s ranks of investment bankers, despite some resistance from those in mergers and acquisitions who are sceptical of his drive to cross-sell other services like loans to their clients.

Allies describe his style as “direct”; others see him as a classic Wall Street bruiser. Over the 10 years that Mr Solomon ran the investment banking division, profit margins nearly doubled and its share of Goldman’s revenue rose to 22 per cent from 11 per cent.

In the trading side of the business, Mr Solomon is less well known and has the additional burden of having seen off some of the division’s most popular figures, including , the former chief financial officer. The two men were rivals for the top job after being promoted to co-chief operating officers in 2016. But when Mr Schwartz stepped down in March it became clear that Mr Solomon had done what it takes to prevail.

“Power inevitably swings to where the profits are being made,” says Ron Marks, a fund manager who ran Goldman’s currency-trading unit in the late 1990s. In that sense, he says, it was natural that Goldman should turn to Mr Solomon, whose division was thriving just as trading was struggling under tougher regulation and much-reduced activity among clients. “I’m surprised Lloyd lasted this long, frankly.”

Mr Solomon has vowed to get a grip on the trading business, and has already asked executives to come up with ways to boost efficiency. “He didn’t decree it, he didn’t mandate it, but he introduced a new way of thinking,” says a senior executive in securities.

Mr Solomon credits his education at Hamilton College with helping him navigate his career. He chose the small, rural institution in upstate New York, partly because he found it less daunting to go from a high school class of 125 to 450 at Hamilton than becoming one of a few thousand at a bigger college.

Students should “take public speaking, take some writing classes; think about how you can develop your communication skills because it will help you in anything that you do,” Mr Solomon said on the podcast. “Everyone should . . . do something that you’re interested in and passionate about because it will round you out and make you more interesting.”

Whether that approach can improve the reputation of Goldman is open to question. “I don’t know whether seeing the president of Goldman . . . spinning tunes at a club is going to change the perception of the industry,” he said in his podcast. “We’ve got a lot of work to do on that front.”

The writers are the FT’s US banking editor and Lex writer

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