It's finally official: David Solomon inherits the crown from Lloyd Blankfein at Goldman Sachs.
The news, announced on Tuesday – after more than a year of jokers, choreography and speculation – is setting one of Wall Street's most significant follow-up pieces in motion. On October 1, Solomon will begin managing Goldman Sachs in just 76 days, at the center of more concentrated money and power circles than any other company in the industry.
From now on, Solomon has a free hand in conducting critical leadership changes, which were expected after Blankfin's 12-year run as CEO. Even before Tuesday's announcement, a rioting of the trading department in May had pointed out Insider's insistence on a more assertive role for Solomon.
This is only the second handover in Goldman's two decades as a public company – insiders and outsiders calculate the winners and losers. Blankfein, on the other hand, does not go all the way down: he helped to make sure his much acclaimed trading department got back on the ground after stumbling over the past year, leaving behind a company that has worked its way into new and diversified finance.
But for a man who joked that he would die at his desk, the transition has come earlier than he himself expected.
"Today I do not want to retire from Goldman Sachs, but my own perhaps complicated logic makes it feel like the right time," Blankfein said in a note to the staff. "It has always been hard for me to imagine that I should go, when times get harder, you can not go, and when times are better, you do not want to go."
The 63-year-old Blankfein has previously admitted that he has to finish first, before he can go on, and has said that Solomon has more time for the presidential job.
"Once the process begins, you become a lame duck," said Charles Peabody, a seasoned bank analyst. "It's hard to stay and feel like you're a productive part of it."
When Solomon, 56, takes over, he will be the oldest new leader in the company in almost 50 years. Solomon is the fourth Chief Operating Officer under Blankfin's reign. The previous three left the company after seeing their way to the top.
Blankfein will give up his role as chairman at the end of the year, which Solomon will take over. Salomon's status as heir to the throne was consolidated in March when the company announced that he would become sole president while Harvey Schwartz – his main rival for the job – left the company.
The handover will take place as Goldman Sachs moves away from its trading activities, a traditional profit center, and moves deeper into new areas such as retail lending. The bank's shares rebounded following the election of Donald Trump in the hope of more trading and easing of the rules. This optimism has faded as the company's shares fell more than 9 percent this year, most among the major US banks.
The change in the company's business was reflected in the second quarter results also announced Tuesday morning. While retail sales recovered year on year, this business accounted for approximately 38 percent of total revenue, compared to nearly 70 percent in 2007.
Solomon joined Goldman Sachs as a partner shortly after the IPO in 1999 and has since been supplemented by its investment banking division. He led this department for a decade, pushing debt, a business that posted record sales last year and accounted for nearly 10 percent of the company's total debt.
"I've been a banker against David Solomon for over 30 years, mostly unsuccessful," said Ken Moelis, a well-known deal maker. "He's smart, focused and innovative, but above all, his integrity is second to none, and David is a brilliant choice to replace Lloyd as CEO."
Solomon grew up in Hartsdale, New York, and studied at Hamilton College. After spending time with Drexel Burnham Lambert, who eventually overcame Mike Milken, he became known at Bear Stearns, where he ran the junk bond counter before being lured to Goldman Sachs.
In the early years of Blankfein's term, Goldman Sachs took on the status of a trading powerhouse, provoking the competitors' envy. But that changed after the global financial crisis, when the company quickly became the poster boy for Wall Street's misdeeds in the eyes of the public.
Blankfein was harassed when he was picked up at congressional committees and had to explain Goldman Sachs in the crisis. Lawmakers complained that the company was taking steps to limit their housing breach while continuing to sell mortgage-related products. While the public continued to shower the company with contempt, Goldman's popularity plummeted even in the financial elite. Blankfein, as the face of the company, bore the brunt of the attacks.
"Lloyd successfully guided Goldman Sachs through a 75-year financial storm and its bitter after-effects," said Hank Paulson, who was Blankfin's predecessor before becoming US Treasury Secretary. "He has become an industry leader, and his keen intellect and sense of humor have made him an effective spokesman for his industry and his company."
Since the crisis, the company has had to rely more on its investment banking group – which Solomon is based in – and less on the trading business. The over-generous lending capacity of the trading sector was reduced following the crisis under the influence of new regulations.
One of Solomon's key decisions is the selection of substitutes for its current role. Candidates include John Waldron, co-head of Investment Banking, and Stephen Scherr, who heads the company's Consumer and Commercial Banking division.
And analysts and investors will pay close attention to the resources that the bank uses to achieve its goal of identifying $ 5 billion in revenue by 2020.
Solomon and Schwartz fought for a hit on the top job after being promoted to co-president in late 2016. This happened after Gary Cohn, Blankfin's long-time number 2, joined the administration of President Donald Trump.
Solomon is likely to be the first person to run a large bank while presenting his credentials as the Electronic Music Disc Jockey, a concert he also resumed after succeeding as heir to the throne in March.