(Adds details on Scherr's history at Goldman and his promotion)
By Lauren Tara LaCapra
NEW YORK, June 2 Goldman Sachs Group Inc
has named Stephen Scherr to become chief strategy officer, a
wide-ranging role that will tap his experience as head of the
financing group to grow the Wall Street bank's returns.
Scherr, 50, has led the financing group globally since 2008.
That team works across Goldman's trading, investment banking and
investment management units to meet clients' funding needs using
loans, derivatives and stock or bond offerings, as well as more
Scherr's appointment, announced in an internal memo on
Monday, came after discussions between him and Chief Executive
Lloyd Blankfein about ways Goldman can boost returns by growing
revenue rather than cutting costs, people familiar with the
Scherr plans to lend more to clients, grow the investment
management business through new product offerings and create new
businesses using technology, said the people, who declined to be
identified discussing internal matters.
Like other Wall Street banks, Goldman's returns have been
under pressure from weak trading volumes and new regulations.
For the past few years it has relied largely on cost cuts to get
its return-on-equity out of the single digits.
Some analysts and investors have criticized Goldman's
reliance on trading, and compared it to top rival Morgan Stanley
, which has made more dramatic changes to its business
model since the crisis.
Lately, Goldman executives have publicly said that they are
not idly waiting for business to improve. Inside the bank, some
view Blankfein's promotion of Scherr as evidence that the bank
is shifting to a more aggressive position to grow revenue.
Goldman's return on equity last year was 11 percent, above
the 10 percent bare minimum that investors and analysts consider
the cost of issuing new stock. While that is above some rivals,
Chief Financial Officer Harvey Schwartz has called it
Scherr will take on his new role at the start of 2015, and
will maintain his other role as head of Latin America, Goldman
said in the memo. He replaces Andrew Chisolm, who is retiring at
year-end and will become an advisory director, the bank said.
Goldman also announced internally that Jim Esposito and Marc
Nachmann will replace Scherr as co-heads of the global financing
group. Esposito is being promoted from head of financing for
Europe, the Middle East and Africa (EMEA), while Nachmann is
moving from his position as co-head of the global natural
As Nachmann moves to the financing group, Brett Olsher will
become co-chairman of global natural resources alongside John
Vaske; Gonzalo Garcia and Suhail Sikhtian will become co-heads
of the group.
Olsher had been co-head of the group with Nachmann. Garcia
had been head of the EMEA natural resources group as well as
co-head of the global power and infrastructure group. Sikhtian
was co-head of global energy and of Goldman's Houston office.
A Goldman spokesman confirmed the contents of four memos
announcing the changes.
(Reporting by Lauren Tara LaCapra; Editing by Chris Reese,
Leslie Adler and Andrew Hay)