Goldman Sachs Need Not Worry, ‘the Schwartz Is with Them’

Goldman Sachs Need Not Worry, ‘the Schwartz Is with Them’

Goldman Sachs‘ CFO made a big announcement yesterday with his retirement plans. He joins a list of several senior executives who have left the company in the past few months. Many think that Gary Cohn will take over from Lloyd Blankfein as well in the next few months.

Goldman Sachs Need Not Worry, 'the Schwartz Is with Them'

We have some of the latest on Goldman including Meredith Whitney’s comments!

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Nomura Research put out a note today titled, End of an Era, but the Schwartz Is with Them

Nomura notes that Goldman Sachs Group, Inc. (NYSE:GS) announced on Tuesday after the market close that CFO David Viniar will retire and join the Board of Directors at the end of January 2013. Harvey M. Schwartz, the global co-head of the Securities Division, will become the CFO at that time. It’s never a good time for someone with David’s long tenure (32 years at GS, including 12 years as CFO) to be stepping down, but investors have been bracing for this over the last ~five years. David was instrumental in navigating GS through the financial crisis and into a much more financially sound company today, and thus, this is as good of a time as any for David to pass the baton (since the end of 2007, leverage is down by 50% and liquidity up by 171%). While they believe Harvey has some big shoes to fill as the new CFO, Harvey can rely on a deep bench of talent at the firm (and Viniar will be staying on as a board member), and Nomura expects the management transition to go smoothly.

Management Structure and Reporting Is Unchanged

Harvey will assume all of David’s responsibilities, including oversight of Operations, Technology, and Finance and as co-head of the Firmwide Risk Committee. No change was made to the company’s management structure or reporting lines, and Lloyd Blankfein remains CEO.

KBW notes;  after the close, CFO David Viniar announced his retirement at the end of January 2013, at which point he will become a non-independent member of the board. Replacing him will be the current co-head of the Securities Division Harvey Schwartz. They believe Mr. Schwartz to be a good fit in this regulatory environment, given his experience running the securities division along with his involvement in several risk and regulatory committees.

Wells Fargo notes;  NOT A REAL SURPRISE, BUT COULD WEAKEN STOCK IN THE VERY NEAR TERM. The market has speculated for some time about the potential for the well established Viniar to relinquish his CFO role so the announcement is hardly surprising. Nor do they believe GS’ strategy is likely to change materially as Schwartz steps into his new role. Still, it seems possible that his replacement could take some time to develop the reputation enjoyed by Mr. Viniar.

Meredith Whitney states:

We view the departure of Goldman’s CFO, David Viniar, as a signal that relative calm has arrived for Goldman Sachs Group, Inc. (NYSE:GS). Viniar has wanted to retire for years, but because he was seen as such a source of stability for the firm and so trusted by the analyst and investor community, coupled with the increased scrutiny for the industry and particularly Goldman, a retirement up to this point has just been “California Dreaming” (joke, he will most likely retire to his beloved compound in CA after January).

We do not view Viniar’s replacement as the newsworthy item; rather it is the ceremonial passing of the torch from the trusted hands of a 12-year serving CFO to the new 40-something year old generation of leaders, a noteworthy event in Goldman Sachs’ short history as a public company. Of course, Viniar would only pass the baton to what he believes to be of highly capable hands, in those of Harvey Schwartz.

No CFO is ever really recognized during the good times, but is always under scrutiny during the bad times. Viniar was unique in his desire to be particularly understated during the good times but constant and visible during the bad times. Over the past decade plus, Viniar has made his mark and set the gold standard for CFOs across the industry. We wish him all of the best in his long awaited and much deserved retirement.

(Disclosure: No position in any securities mentioned)

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