Goldman President Solomon to Become CEO on Oct. 1

Goldman Sachs on Tuesday named David M. Solomon as its next chief executive officer, putting a veteran investment banker in charge of a Wall Street giant that faces mounting challenges.

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Goldman Sachs on Tuesday named David M. Solomon as its next chief executive officer, putting a veteran investment banker in charge of a Wall Street giant that faces mounting challenges.

Solomon’s appointment will end the tenure of Lloyd C. Blankfein, the 63-year-old former gold salesman who has run the firm since 2006 and steered it through the financial crisis. Blankfein will hand over the chief executive role on Oct. 1 and remain chairman until the end of the year. Solomon, 56, currently the bank’s president, will add the chairman title at the beginning of 2019.

Solomon’s appointment is likely to begin a series of management changes in the upper ranks of the firm as the new chief executive selects his own lieutenants. He will also have responsibility over a plan to increase the bank’s revenue by $5 billion over a three-year period.

“Organizations, to move forward, have to evolve, they have to change, they have to adapt,” said Solomon in a joint interview late Monday with Blankfein before the formal announcement. “When things are going badly, you can’t leave. And when things are going well, you don’t want to leave,” Blankfein said. “So if you’re going out on your own steam, it’s always going to be at a moment when you don’t want to leave. And by the way, that’s why people sometimes stay too long.”

The announcement came the same day that Goldman Sachs reported better-than-expected financial results.

Solomon was named sole president of the firm in March, raising expectations that he would eventually rise to its top job.

Blankfein oversaw a period of change at Goldman Sachs. Its money-management business, while smaller than that of Morgan Stanley, probably Goldman’s closest competitor, roughly doubled. Goldman’s shares are up 57 percent during Blankfein’s tenure, a better performance than all but two major U.S. banks, JPMorgan Chase and Wells Fargo.

More recently, Goldman has come under pressure. Its securities trading businesses, long been considered a core strength, have performed worse than other big banks in recent years by wide margins.

Nevertheless, “this is a period of time when I’m feeling quite optimistic about our positioning,” Blankfein said. “I’m also feeling quite good about the external environment.”

He added that there was no personal reason for his departure.

“Could it have been earlier?” he said. “Could it be later? I’m not tired. I’m well. I’m not out of gas.” But he added, “David is ripe and ready and the right guy.”

Already, Solomon has pushed for changes to Goldman’s business. He has introduced smarter technology in stock trading and investment management. He has moved salespeople from corporate-trading desks into the investment-banking division to help streamline interactions with clients. He is expanding Goldman’s nascent consumer bank, which is called Marcus, into new areas.

To some analysts and other close watchers of Goldman, the shift should have come sooner. “Lloyd Blankfein’s legacy will be defined by how Goldman performs over the next couple of years after he’s gone,” said Mike Mayo, a banking analyst at Wells Fargo who has covered Goldman for 15 years. The firm’s growth plan, he added, “would fall into the category better late than never.”

During Blankfein’s first full year running Goldman Sachs, the firm brought in close to $1 billion per week in revenue, thanks largely to its stock and bond trading. Then came the financial crisis that hobbled the banking industry, followed by a return to robust profits in 2009. Those were later challenged by a raft of new regulations that upset its legacy business model.

“There were opportunities in my time that I may have missed and there were traps that I caught,” Blankfein said. “At the end of the day, the firm during my tenure faced existential risk in terms of the first half of the financial crisis and extraordinary reputational risk, which came about partially because we navigated the existential risk as well as we did.”

The firm also faced a raft of criticism for profiting from the financial crisis at the expense of some clients. It incurred a $550 million fine from the Securities and Exchange Commission for its actions.

The selection of Solomon marks a cultural change at Goldman Sachs. Solomon is an investment banker rather than a trader in a culture that has been dominated by trading for much of the past decade. Unlike many of his peers who grew up within Goldman, Solomon was hired as a partner after a swift rise at Bear Stearns, a rival firm.

In a sharp contrast to the typical Wall Street chief executive, Solomon is known for having a variety of outside interests, including collecting rare wine, practicing yoga and, most famously, playing electronic dance music as a DJ once a month under the stage name DJ D-Sol. Solomon’s biography on Spotify — where he recently released his first single, a remix of the Fleetwood Mac tune “Don’t Stop” — says, “His personal mantra is to never lose sight of what you are passionate about.”

As for what Blankfein might do next, he said with a laugh, “Now I’m on the job market.”

“I’ll probably follow people’s advice and take at least a couple of weeks off,” he said. Then, in a nod to his use of Twitter, which has sometimes made the news, he added, “Here’s one thing I look forward to: unrestrained tweeting.”