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Breakingviews

Breakingviews - Goldman’s partners more diversified than diverse

The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., December 18, 2018. REUTERS/Brendan McDermid

NEW YORK (Reuters Breakingviews) - As Wall Street firms fall over themselves to improve their diversity credentials, Goldman Sachs’s biennial selection of new partners has more than the usual significance. On balance, the class of 2020 is a solid B-plus – a little more inclusive than the bank’s overall executive ranks, but still representative of an industry that’s mostly white and male. But Goldman’s picks may say something more decisive about its overall financial trajectory.

Only 60 staff made the partnership this year, winning access to a special bonus pool, as well as other perks and ambassadorial duties. That’s down from 69 last time and the smallest number in at least two decades. In terms of diversity, Chief Executive David Solomon has at least moved in the right direction. Just 27% of the elect are women, for example, and 7% identify as Black. That’s less than the general population, but in Goldman’s top tier of employees more broadly, 23% are women and just under 3% Black or African American, according to its most recent sustainability report.

Perhaps as significant is the diversification of what Goldman and its partners actually do. Solomon has talked about deriving more of Goldman’s income from less volatile activities like advising companies, or making interest on loans rather than the choppy business of trading securities. That slipped out of reach this year, as Covid-19 led to dramatic swings in markets and windfalls for trading desks. Those flightier activities made up 47% of Goldman’s revenue in the past four quarters, compared with 41% a year earlier.

On that score, the partnership looks like a better guide to what Solomon has in mind. Around 35% of the new partner class comes from the firm’s global markets division, which includes trading. Two years ago, 41% were in securities. That suggests the trading desk is becoming less of a stairway to heaven. Meanwhile, for all the sound and fury around Solomon’s consumer banking initiative, it generated no new partners – suggesting that division, and its employees, have a little more work to do.

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