June 2, 2014 / 5:50 PM / 4 years ago

UPDATE 2-Goldman promotes Scherr to strategy chief with eye toward growth

(Adds details on Scherr’s history at Goldman and his promotion)

By Lauren Tara LaCapra

NEW YORK, June 2 (Reuters) - 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 exotic products.

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 matter said.

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 uninspiring.

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 resources business.

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

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below