At an investor day on Tuesday, Solomon pledged to stop losses at its consumer lending and financial technology division by 2025 while also considering alternatives for parts of the business, including a sale or a restructuring.
The newly created division, called Platform Solutions, has made more than $3bn in pre-tax losses since 2020.
“It became clear that we lacked certain competitive advantages and that we did too much too quickly, which affected our execution,” Solomon said in a presentation at the bank’s Manhattan headquarters.
Goldman shares were down about 1.8 per cent in morning trading in New York, a steeper drop than the broader market. Since taking over as chief executive in 2018, Solomon has increased Goldman’s market share in trading and dealmaking.
But he has been less successful in his efforts to build up businesses that generate the kind of stable returns that are valued by shareholders, such as asset and wealth management.
Solomon’s pitch for a more durable Goldman is threefold: to operate more efficiently, to win market share in investment banking and trading, and to expand in asset and wealth management to generate the stable fees that are highly prized by investors.
The pitch is similar to the one laid out in 2020 at the bank’s first investor day, though now missing is an emphasis on consumer banking.
Goldman last year decided to pare back its “Main Street” ambitions through its Marcus brand following shareholder unease around escalating losses.
A diminished version of the Marcus business, for which Goldman is not exploring strategic alternatives, now sits within the wealth management unit.
Goldman maintained a $225bn gross fundraising target for its alternatives in asset management by 2024, as well as goals to earn company-wide management and other fees of more than $10bn.
The bank gave more detail about its plans to sell most of its so-called on-balance sheet investments, a remnant of the era when the bank would wager its own capital in areas such as private equity and real estate.
It aims to reduce its $30bn of legacy investments to less than $15bn by the end of 2024 and sell them all in the next three to five years.
The plan is to replace these earnings over time with management and performance fees from investing third-party funds.