Lananh Nguyen is the U.S. finance editor at Reuters in New York, leading coverage of U.S. banks. She joined Reuters in 2022 after reporting on Wall Street at The New York Times. Lananh spent more than a decade at Bloomberg News in New York and London, where she wrote extensively about banking and financial markets, and she previously worked at Dow Jones Newswires/The Wall Street Journal. Lananh holds a B.A. in political science from Tufts University and an M.Sc. in finance and economic policy from the University of London.
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Focus: Goldman Sachs CEO’s growth strategy gets traction with board-sources
NEW YORK, July 18 (Reuters) – Goldman Sachs’ (GS.N) board supports CEO David Solomon’s focus on its core Wall Street businesses and asset management, according to two sources close to Solomon.
The executive is tasked with reviving the bank’s stock, even as scepticism from some investors and employees grows.
The 12-member board of directors is intensely focused on Solomon’s refreshed strategy, one of the two sources told Reuters, after the firm’s foray into the consumer banking business saddled Goldman with losses and left if lagging rival Morgan Stanley.
The expected arrival of Tom Montag, who was approached by Solomon, also signals to insiders that the chief executive and his turnaround plans have internal support at the top, separate sources said.
The assessment, which follows Goldman’s recent board meeting in India, has not been previously reported. It shows that the circle around Solomon believe in his ability to revive the bank’s fortunes.
The bank’s shares have fallen about 2% in 2023, lagging competitors Morgan Stanley (MS.N) and JPMorgan Chase (JPM.N) where shares have risen 8% and 15%, respectively. Even so, Goldman’s stock is still outperforming the S&P banks index, which is down more than 3% this year.
Goldman is trading at a forward price-to-book multiple of 0.99 times compared to JPMorgan, which trades at 1.43 times and Morgan Stanley’s 1.53 times, according to Refinitiv’s Eikon data.
The bank declined to comment on its share price performance.
LOST FAITH?
David Wagner, a portfolio manager at Aptus Capital Advisors, exited his small position in Goldman Sachs months ago because he was unimpressed with managers’ handling of the consumer business.
“The inability to execute on this front has led us to believe that there is a lot of internal strife at the company, which could create employee retention problems in the future as faith in David Solomon could be lost,” Wagner said.
Analysts have questioned the banks’ reorganization, which the bank argued strengthened its core business.
The firm has been belt-tightening in an ongoing push to cut $1 billion in costs, targeting smaller and smaller line items and contemplating more job cuts, sources previously said.
More bad news is expected on Wednesday when the bank is likely to report an almost 59% drop in earnings per share in its second-quarter results along with a writedown on fintech business GreenSky. Marcus, the consumer business, lost $3 billion in three years, and is being wound down.
BOARD BOOST
Solomon approached former Bank of America Chief Operating Officer Tom Montag after his retirement to discuss a Goldman board seat, according to two sources with knowledge of the situation. Montag was recommended by the board’s nominating committee to join as an independent director, according to a regulatory filing last month.
Montag previously worked at Goldman for 22 years and served as the co-head of its global securities business. Known as an intense and hands-on boss, he is expected to fortify Solomon’s position, according to five senior sources who worked with the executives.
The board’s secretary did not respond to direct requests for comment. Several board members did not respond to requests for comment, while others could not be reached for comment.
A Goldman Sachs spokeswoman said in a statement: “David and the leadership team are focused on executing on the strategic goals we laid out at investor day to grow and strengthen our existing businesses, diversify our products and services and operate more efficiently.”
Solomon did not respond to a Reuters request for comment.
The Wall Street giant laid off hundreds of staff in the second quarter, adding to a round of cuts in January of about 3,200 employees, the biggest reduction since the 2008 financial crisis.
In response to question about departures of senior executives including partners, the spokeswoman added that Goldman partners are staying longer, with their average tenure rising to 8.3 years in 2022 from 6.2 years in 2010.
STILL NO. 1
Solomon took the top job in 2018, leaning into Goldman’s consumer business to broaden earnings beyond volatile revenue from trading and dealmaking. The retail operations struggled to gain traction against well-established consumer banks, prompting the bank to set aside billions to cover potential loan losses.
Even after its ill-fated foray in consumer banking, the investment bank still ranked as the top adviser for global mergers and acquisitions in the first half of this year, according to Dealogic.
Goldman’s enduring influence was on show at a recent board meeting convened in India last month, which included a meeting with Prime Minister Narendra Modi.
Board member and billionaire steel magnate Lakshmi Mittal hosted a reception for Goldman clients and government officials at his luxurious residence in New Delhi, according to a source who attended the event. Mittal’s company ArcelorMittal did not respond to a request for comment about the meeting.
“Just got back from an incredible trip to India where our leadership team and I met with our board of directors,” Solomon wrote in a LinkedIn post with photos of the group.
Reporting by Saeed Azhar and Lananh Nguyen; Editing by Megan Davies and Anna Driver
Our Standards: The Thomson Reuters Trust Principles.
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World
Israel keeping its ‘eyes open’ for Iranian attacks during Trump transition period, ambassador says
Israel’s U.N. Ambassador Danny Danon tells Fox News Digital that his country is keeping its “eyes open” for any potential aggression from Iran during the Trump transition period, adding it would be a “mistake” for the Islamic Republic to carry out an attack.
The comments come after Iranian Foreign Minister Abbas Araghchi vowed earlier this week that Iran would retaliate against Israel for the strategic airstrikes it carried out against Tehran on Oct. 26. Araghchi was quoted in Iranian media saying “we have not given up our right to react, and we will react in our time and in the way we see fit.”
“I would advise him not to challenge us. We have already shown our capabilities. We have proved that they are vulnerable. We can actually target any location in Iran. They know that,” Danon told Fox News Digital.
“So I would advise them not to make that mistake. If they think that now, because of the transition period, they can take advantage of it, they are wrong,” he added. “We are keeping our eyes open and we are ready for all scenarios.”
ICC REJECTS ISRAELI APPEALS, ISSUES ARREST WARRANTS FOR BENJAMIN NETANYAHU, YOAV GALLANT
Danon says he believes one of the most important challenges for the incoming Trump administration will be the way the U.S. deals with Iran.
“Regarding the new administration, I think the most important challenge will be the way you challenge Iran, the aggression, the threat of the Iranian regime. I believe that the U.S. will have to go back to a leading position on this issue,” he told Fox News Digital.
“We are fighting the same enemies, the enemies of the United States of America. When you look at the Iranians, the Houthis, Hezbollah, Hamas, all those bad actors that are coming against Israel… that is the enemy of the United States. So I think every American should support us and understand what we are doing now,” Danon also said.
IRAN HIDING MISSILE, DRONE PROGRAMS UNDER GUISE OF COMMERCIAL FRONT TO EVADE SANCTIONS
Danon spoke as the U.S. vetoed a draft resolution against Israel at the U.N. Security Council on Wednesday.
The resolution, which was overseen by Algeria, sought an “immediate, unconditional and permanent cease-fire” to be imposed on Israel. The resolution did not guarantee the release of the hostages still being held by Hamas within Gaza.
“It was a shameful resolution because… it didn’t have the linkage between the cease-fire and the call [for] the release of the hostages. And I want to thank the United States for taking a strong position and vetoing this resolution,” Danon said. “I think it sent a very clear message that the U.S. stands with its strongest ally with Israel. And, you know, it was shameful, too, to hear the voices of so many ambassadors speaking about a cease-fire but abandoning the 101 hostages. We will not forget them. We will never abandon them. We will continue to fight until we bring all of them back home.”
Fox News’ Benjamin Weinthal contributed to this report.
World
Fact-check: What do we know about Russia’s nuclear arsenal?
Moscow has lowered the bar for using nuclear weapons and fired a missile capable of carrying a nuclear warhead into Ukraine, heightening tensions with the West.
Russia’s nuclear arsenal is under fresh scrutiny after an intermediate-range ballistic missile capable of carrying an atomic warhead was fired into Ukrainian territory.
President Vladimir Putin says the unprecedented attack using the so-called “Oreshnik” missile is a direct response to Ukraine’s use of US and UK-made missiles to strike targets deep in Russian territory.
He has also warned that the military facilities of Western countries allowing Ukraine to use their weapons to strike Russia could become targets.
The escalation comes days after the Russian President approved small but significant changes to his country’s nuclear doctrine, which would allow a nuclear response to a conventional, non-nuclear attack on Russian territory.
While Western officials, including US defence secretary Lloyd Austin, have dismissed the notion that Moscow’s use of nuclear weapons is imminent, experts warn that recent developments could increase the possibility of nuclear weapons use.
Here’s what we know about Russia’s inventory of atomic weapons.
How big is Russia’s nuclear arsenal?
Russia holds more nuclear warheads than any other nation at an estimated 5,580, which amounts to 47% of global stockpiles, according to data from the Federation of American Scientists (FAS).
But only an estimated 1,710 of those weapons are deployed, a fraction more than the 1,670 deployed by the US.
Both nations have the necessary nuclear might to destroy each other several times over, and considerably more atomic warheads than the world’s seven other nuclear nations: China, France, India, Israel, North Korea, Pakistan and the United Kingdom.
Of Moscow’s deployed weapons, an estimated 870 are on land-based ballistic missiles, 640 on submarine-launched ballistic missiles, and potentially 200 at heavy bomber bases.
According to FAS, there are no signs Russia is significantly scaling up its nuclear arsenal, but the federation does warn of a potential surge in the future as the country replaces single-warhead missiles with those capable of carrying multiple warheads.
Russia is also steadily modernising its nuclear arsenal.
What could trigger a Russian nuclear response?
Moscow’s previous 2020 doctrine stated that its nuclear weapons could be used in response to an attack using nuclear or other weapons of mass destruction “when the very existence of the state is put under threat.”
Now, the conditions under which a nuclear response could be launched have changed in three crucial ways:
- Russia will consider using nuclear weapons in the case of a strike on its territory using conventional weapons, such as cruise missiles, drones and tactical aircraft.
- It could launch a nuclear attack in response to an aggression by a non-nuclear state acting “with the participation or support of a nuclear state”, as is the case for Ukraine.
- Moscow will also apply the same conditions to an attack on Belarus’ territory, in agreement with President Lukashenko.
Is there a rising nuclear threat?
The size of the world’s nuclear stockpiles has rapidly decreased amid the post-Cold War détente. The Soviet Union had some 40,000 warheads, and the US around 30,000, when stockpiles peaked during the 1960s and 70s.
But FAS warns that while the overall number is still in decline, operational warheads are on the rise once again. More countries are also upgrading their missiles to deploy multiple warheads.
“In nearly all of the nuclear-armed states there are either plans or a significant push to increase nuclear forces,” Hans M. Kristensen, Director of the Nuclear Information Project at the Federation of American Scientists (FAS), said in June this year.
Is the West reacting?
When Putin approved the updated nuclear protocol last week, many Western leaders dismissed it as sabre rattling.
German Foreign Minister Annalena Baerbock said Germany and its partners would “not be intimidated” and accused Putin of “playing with our fear.”
But since Russia used a hypersonic ballistic missile capable of carrying a nuclear warhead in an attack on Dnipro, European leaders have raised the alarm.
“The last few dozen hours have shown that the threat is serious and real when it comes to global conflict,” Polish Prime Minister Donald Tusk said on Friday.
According to Dutch media reports, NATO’s secretary-general Mark Rutte is in Florida to urgently meet President-elect Donald Trump, potentially to discuss the recent escalation.
NATO and Ukraine will hold an extraordinary meeting in Brussels next Tuesday to discuss the situation and the possible allied reaction, according to Euronews sources.
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