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Opinion

Macaskill on markets: Goldman takes pole position for Volcker Rule 2.0

Goldman Sachs delivered strong first-quarter trading results that were followed by a reorganization of the management of its securities division.

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Two of the three global securities co-heads will retire in a move that seemed to be partly timed to spare them the indignity of taking public blame for last year’s trading problems.

Management dynamics were also at play in the departures of Isabelle Ealet and Pablo Salame from their roles co-running sales and trading at Goldman.

In March, David Solomon was appointed sole president of Goldman Sachs and likely successor to long-standing chief executive and chairman Lloyd Blankfein. This could be viewed as a cue for a move to the exit by veteran trading heads of a similar age who were closer to Solomon’s rival and former co-president Harvey Schwartz.

Solomon’s appointment has been widely interpreted as a sign of a shift in power within Goldman from traders to bankers and the acceleration of a move to diversify revenue sources by expanding into unfamiliar areas such as consumer banking.

That doesn’t mean that Goldman’s remaining traders will not act aggressively to take advantage of a coming relaxation in the Volcker Rule that limits proprietary dealing. There are signs that the firm has already started to increase its exposure to trading risk.




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