Why Goldman Named David Solomon as Next in Line to Replace CEO Blankfein

Solomon and Schwartz have been directly competing for Blankfein’s endorsement — and by extension, a shot at the top job — since being promoted to co-presidents in late 2016, after Gary Cohn left to join Donald Trump’s administration.

The competition has been a favorite topic of conversation within the halls of its Manhattan headquarters, with one executive saying it distracted from day-to-day business.

“The increased transparency also likely puts insiders more at ease so that they can focus on running Goldman Sachs,” UBS Group AG analyst Brennan Hawken wrote in a report Monday. The “move to expand beyond trading could get a subtle boost under Mr. Solomon given his diverse background (i.e. not another trader).”

‘Banking Future’

Solomon, 56, a former investment banker, has been boosted by the strength in that business, where Goldman Sachs posted record revenue in 2017. The firm’s fixed-income trading business, which produced Schwartz, is coming off its worst year in more than a decade.

Solomon rose through the financing business after joining as a partner from Bear Stearns Cos. and ran the firm’s top-ranked investment-banking business for a decade.

During that time, Goldman Sachs decided to build out the debt capital markets business, largely territory dominated by the large commercial banks like JPMorgan Chase & Co. and Bank of America Corp. The business now ranks among the largest lenders to M&A buyers, and it reported record revenue last year.

“We saw the future as more of an investment-banking future than a securities or trading future and that favored Solomon,” Charles Peabody, a Compass Point Research & Trading analyst, said in an interview with Bloomberg Television.

Solomon has also taken on a leading role in the firm’s diversity push, including presenting ideas to the board last June. He’s also led a push on retaining junior bankers, such as scaling back the hours they work, making them rest on Saturdays and encouraging them to have interests outside of work. Solomon moonlights as an electronic music disc jockey, which he puts in terms of giving an example to younger bankers.