Goldman Sachs CEO David Solomon has expressed his support for India’s growth story, highlighting the country’s high growth trajectory. According to Solomon, India is predicted to grow 6-7 percent over the next three years. Solomon believes that people worldwide view India as an attractive investment destination because of its young population, vast consumer market, and ongoing reforms. However, he also recognizes the challenges associated with investing in India, including complex regulations and bureaucratic hurdles.
Solomon is on his first trip to India since becoming Goldman CEO last year, hoping to soothe investors with new promises. At its recent investor day, he issued a mea culpa for growing into businesses where it did not have a competitive advantage and promised to sell off non-core assets that no longer make sense. He also teased the sale of GreenSky, a home-improvement lender that the firm bought just a year ago.
The move is a clear sign that Solomon is trying to reign in expenses at the firm, which has seen its revenue surge under his leadership but profits slump. It comes as he seeks to jump-start revenue growth by forging into new markets that the firm had previously overlooked (from large-scale quant trading to managing corporate payments). He is also tasked with squeezing more efficiency out of the company, which may mean cutting salaries and reducing bonuses for top performers.
But the recent deluge of negative news surrounding Goldman has stung rank-and-file employees. Several top executives have left the firm in just a matter of months. In March alone, co-head of global asset management Eric Lane and head of the Marcus consumer lending business Omer Ismail both exited. The departures came amidst criticism that Goldman was focusing too much on its bottom line and undermining its culture.
However, Solomon remains steadfast in his commitment to the firm despite the current turmoil. At the Investor Day, he told employees that he was still committed to the firm’s core principles and its founders’ values while acknowledging the challenges facing the world economy. He added that he is convinced that the firm will emerge stronger from this challenging period and is confident in its ability to continue to meet the needs of its clients. This is a rare show of confidence by a CEO at a time when many others have been less enthusiastic about their prospects. He may face a review of his tenure this week when the Goldman board meets in India. He is expected to be re-elected, but that may be in doubt if he can convince shareholders that the firm is addressing its culture problems. It will be a crucial test of his leadership. He must convince the board that he is up to the challenge of restoring Goldman’s reputation as one of the best places to work on Wall Street.