The news: Goldman Sachs’ Q3 earnings topped analysts’ estimates, thanks to strong fixed-income trading. The bank also announced a big overhaul that it hopes will staunch the bleeding from Marcus.
Earnings recap: Goldman’s Q3 performance resembled that of the other major US banks, hitting on many of the earnings themes we highlighted earlier.
A welcomed shakeup: Goldman also formally announced major changes to the bank’s structure, including the unwinding of its consumer banking unit, Marcus. The shake-up, which will result in three new divisions, has been rumored over the past few weeks.
Goldman’s decision to back away from the digital, consumer-focused Marcus will be a relief to investors and shareholders, who questioned its viability as losses mounted and the bank’s share price fell. Marcus was a costly investment to stand up, and the high-yielding interest on savings accounts proved to be unsustainable.
What to watch: Marcus was cited as one of the major drivers behind Goldman’s falling profits over the past 12 months. With this reorganization, Goldman will need to rebuild its investors’ confidence and prove that it can recover from the billions of dollars in losses the digital bank generated. Here are a few things to keep an eye on:
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