Bove bashes Blankfein and bank’s 3-year plan
Goldman Sachs Chief Executive Lloyd Blankfein may be too puny to “muscle in” on new financial markets, according to a top banking analyst.
Wall Street curmudgeon Dick Bove unleashed a blistering report on Goldman Monday, doubting that its execs can pull off a three-year plan to fix the bank’s stubborn trading slump.
Bove likewise raised questions about the extent of Goldman’s involvement in the Venezuelan bond crisis, and predicated that its turnaround plans unveiled last week won’t jumpstart the “transformational change” that’s needed.
“Bottom line, Goldman is attempting to use its capital to ‘muscle in’ on highly competitive businesses dominated by bigger companies. Usually, this does not work,” Bove, an analyst at Vertical Group, wrote in the Monday report.
Last week, Goldman’s co-chief operating officer outlined a plan to reverse a prolonged slump at its trading unit.
The plan calls for raising $5 billion in revenue by increasing investment in trading and other areas where it hasn’t traditionally focused, like lending.
But Bove isn’t buying it, noting that Goldman’s three-year timeline is essentially asking investors to trust Blankfein & Co. until 2020.
Bove, who’s previously blamed Blankfein for a “lost decade” in which Goldman’s stock price has remained stagnant, says the bank’s top employees are a little too proud of themselves to make any real change.
“Goldman perceives itself to be a partnership composed of extremely capable individuals,” he said. “It has yet to admit that since 2006, it has one of the worst records of any of the nation’s big six banks. It appears to be blind to its clear weaknesses.”
Goldman’s stock is the worst-performing of any major bank this year, down nearly 5 percent, to $227.53. The KBW bank index of major financial institutions is up 3.5 percent this year.
During the first half of the year, the bank, normally a powerhouse of bond trading, has been playing catch-up to its rivals. Last quarter, its trading revenue fell 40 percent while competitors gained.