WEBVTT - Goldman Sachs CFO Denis Coleman Talks Trump's FTC Nomination

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Welcome to our Bloomberg television and radio audiences. I'm Shanali Bassek,

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<v Speaker 2>and I'm standing by with the chief financial Officer of

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<v Speaker 2>Goldman Sachs, Dennis Coleman. And I know Dennis that you

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<v Speaker 2>are deep into planning for twenty twenty five. What is

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<v Speaker 2>your number one priority as you head into next year.

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<v Speaker 3>Well, first and all, let me just say welcome to

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<v Speaker 3>the Goldman Sachs Financials Conference.

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<v Speaker 1>It is our thirty fifth annual.

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<v Speaker 3>We have over one hundred issuers here as many as

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<v Speaker 3>fourteen hundred other guests interested in the financial sector. So

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<v Speaker 3>a really big event and we're really happy to have

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<v Speaker 3>Bloomberg here with us today.

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<v Speaker 1>In terms of our priorities as we.

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<v Speaker 3>Head into twenty twenty five, given our outlook and given

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<v Speaker 3>our two world class interconnected businesses, we are really optimistic

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<v Speaker 3>on the prospect to continue to drive growth for our

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<v Speaker 3>clients and for Goldman Sachs. And so my number one

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<v Speaker 3>priority is making sure that all the people of Goldman

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<v Speaker 3>Sachs are front footed and focused on clients we can

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<v Speaker 3>serve them as.

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<v Speaker 1>Best we can.

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<v Speaker 3>Heading into twenty twenty five, many of the other things

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<v Speaker 3>should take care of themselves.

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<v Speaker 2>Front footed and ready to go. You know, if you

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<v Speaker 2>take a look at the market reaction, you see so

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<v Speaker 2>many investors betting on investment bank stocks. Goldman benefiting more

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<v Speaker 2>than any any of the big six banks out there.

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<v Speaker 2>Your stock is up more than fifty two percent this year.

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<v Speaker 2>What does that mean in terms of what investors should

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<v Speaker 2>expect for next year? Is that runoff justified? Is there

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<v Speaker 2>more to come? How much activity should they expect?

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<v Speaker 3>So? I think what investors see is a combination of factors.

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<v Speaker 3>They see an improving macroeconomic backdrop, They have increasing optimism

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<v Speaker 3>about the growth trajectory in twenty twenty five, and they

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<v Speaker 3>recognize that Goldman Sachs has established leading market share positions

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<v Speaker 3>across both global banking and markets and asset and wealth management.

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<v Speaker 3>Certain of the activities within our portfolio of global banking

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<v Speaker 3>and markets have not been performing at their ultimate potential,

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<v Speaker 3>yet our rankings and our market share positions are absolutely

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<v Speaker 3>top and so as we see an uptick in activity

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<v Speaker 3>heading the two tenty twenty five, I think they appreciate

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<v Speaker 3>that our firm, with our client franchise, should be able

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<v Speaker 3>to drive a lot of elevated activity.

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<v Speaker 2>Do you think there could be some choppy waters on

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<v Speaker 2>the road to more M and A. You look at

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<v Speaker 2>just the last couple of weeks of the Biden administration.

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<v Speaker 2>You see the Kroger Albertson's deal fall apart in under

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<v Speaker 2>the weight of the FTC. You see a bigger crackdown

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<v Speaker 2>on that Nippon Steel ustal merger from the Biden administration.

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<v Speaker 1>And you have.

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<v Speaker 2>Trump naming somebody to lead the FTC with Andrew Ferguson.

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<v Speaker 2>Stack it all up together, do you think that there

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<v Speaker 2>could still be headwinds to M and A given the

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<v Speaker 2>future antitrust environment and the one that we're still making

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<v Speaker 2>our way through today.

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<v Speaker 3>So I think we've seen some sustained growth in M

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<v Speaker 3>and A activity moving towards the average levels of activity

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<v Speaker 3>over the last ten years. There have been a number

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<v Speaker 3>of headwinds to the unlocking of the ultimate quantum of

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<v Speaker 3>MNA activity over the course of the last year. I

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<v Speaker 3>think with Fergin's nominee there could be a new direction

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<v Speaker 3>at the FTC. Obviously, as a sitting commissioner scented with

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<v Speaker 3>the current leadership on a number of cases, and so

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<v Speaker 3>we could see a more favorable environment heading into twenty

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<v Speaker 3>twenty five that could actually spur more by way of

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<v Speaker 3>CEO confidence and in turn unlocking more investment, more activity,

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<v Speaker 3>and provide a more favorable strategic backdrop.

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<v Speaker 2>Now, what is it that you're preparing for. We've had

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<v Speaker 2>bankers tell us investment bankers across Wall Street tell us

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<v Speaker 2>they're preparing for the return of the mega deal. Do

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<v Speaker 2>you think big ticket, more than fifty billion dollar deals

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<v Speaker 2>can come back at scale?

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<v Speaker 3>So, we historically have the leading market share in both

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<v Speaker 3>announced and completed M and A over many, many, many years,

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<v Speaker 3>and a big part of that franchise is doing some

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<v Speaker 3>of the biggest deals as they present themselves for opportunities

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<v Speaker 3>as we move into.

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<v Speaker 1>Twenty twenty five.

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<v Speaker 3>Given where the markets are, given the backdrop, given the

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<v Speaker 3>quality of our client franchise, and given the level of

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<v Speaker 3>engagement that we've seen post the turnover in the administration,

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<v Speaker 3>we are optimistic about the prospect for more deal flow.

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<v Speaker 3>And in particular, we see through our business inquiry coming

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<v Speaker 3>from clients for more by way of capital committed financing

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<v Speaker 3>transactions that is, in and of itself a signal for

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<v Speaker 3>a different type of transaction and a different level of

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<v Speaker 3>activity dovetails very well with our capability set, and I

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<v Speaker 3>think is reinforcing of the prospect for more deal activity.

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<v Speaker 2>You know, it's interesting as I sit here with you today,

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<v Speaker 2>you also had that CPI report and an inflation report

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<v Speaker 2>that did drive yields lower. But when you look across

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<v Speaker 2>the horizon, you are looking at a lot of uncertainty

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<v Speaker 2>when it comes to the industry outlook from investors. How

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<v Speaker 2>much can that throw a wrench in the activity for

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<v Speaker 2>next year? Are you worried about the direction of interest rates,

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<v Speaker 2>especially if tariff policies were to drive inflation higher.

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<v Speaker 3>So interest rate policy is obviously a really big piece

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<v Speaker 3>of the equation overall level of interest rates coming down.

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<v Speaker 3>Notwithstanding the CPI print this morning, I think we're still

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<v Speaker 3>pricing a greater likelihood of a twenty five basis point

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<v Speaker 3>cut into the end of this year the December meeting.

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<v Speaker 3>As we head into twenty twenty five, there are some uncertainties.

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<v Speaker 3>We'll have to see what types of policies present themselves.

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<v Speaker 3>We have to see how the economic growth continues to unfold.

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<v Speaker 3>There currently are more cuts priced into twenty twenty five,

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<v Speaker 3>but that type of environment where you have rates coming down,

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<v Speaker 3>you still see sustained levels of GDP growth, unemployment under control.

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<v Speaker 3>That is a favorable backdrop for ongoing levels of deal activity.

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<v Speaker 2>So do you worry at the end of the day

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<v Speaker 2>at all about the necessity for interest rate rise even

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<v Speaker 2>next year or do you think that wouldn't even be

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<v Speaker 2>on the table.

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<v Speaker 3>I'm in the business of worrying about a lot of

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<v Speaker 3>things as a CFO, and as a CFO of Goldman Sachs,

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<v Speaker 3>we see risks in many different places, so we're always

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<v Speaker 3>focused on sort of counter consensus moves that could occur.

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<v Speaker 3>But I think the consensus that we're seeing in the

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<v Speaker 3>way the markets are pricing things, and what we're seeing

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<v Speaker 3>from our clients and based on their own behavior for

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<v Speaker 3>the time being, the base case expectation is for an

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<v Speaker 3>improved and benign backdrop, But of course the unexpected things

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<v Speaker 3>can happen and we need to be prepared for that.

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<v Speaker 2>What is your biggest worry when you head into twenty

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<v Speaker 2>twenty five.

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<v Speaker 3>So there are again long list of things that we

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<v Speaker 3>need to be focused on.

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<v Speaker 1>The Things that are very much.

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<v Speaker 3>Top of mind for me in these days geopolitical risk.

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<v Speaker 3>You know, recently we discussed and in the last week alone,

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<v Speaker 3>we've seen, you know, government disruptions across Korea, across France,

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<v Speaker 3>across Syria.

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<v Speaker 1>That's just in one week.

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<v Speaker 3>So it's a reminder that around the world there are

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<v Speaker 3>levels of instability that you need to be mindful of.

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<v Speaker 1>I'm always quick.

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<v Speaker 3>To point out that cybersecurity is a risk. It's a

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<v Speaker 3>risk that all of us experience operating in a global

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<v Speaker 3>and interconnected world. So just off the top of my head,

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<v Speaker 3>those will be two things I would flag for you, Shinali.

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<v Speaker 2>Another thing you mentioned a little earlier is that your

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<v Speaker 2>number one priority is to get your people on their

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<v Speaker 2>front foot for next year. What does that mean if

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<v Speaker 2>you think about the talent story, is Goldman Sachs ready

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<v Speaker 2>to be hiring bankers once again to capitalize on that

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<v Speaker 2>M and A activity. How do you think about where

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<v Speaker 2>you stand on the talent story today?

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<v Speaker 3>So talent is the mission critical component of Goldman Sachs.

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<v Speaker 3>It's one of the most important things we need to

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<v Speaker 3>be successful as a company, successful for our clients. Very

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<v Speaker 3>proud history of attracting the best and brightest, developing them

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<v Speaker 3>and then making sure that we create the kind of

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<v Speaker 3>work environment client franchise that makes them feel confident they

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<v Speaker 3>can develop long term productive career at Goldman Sachs. I

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<v Speaker 3>think there's an excitement that they feel in terms of

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<v Speaker 3>the overall uptick in activity. These are professionals at the

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<v Speaker 3>top of their game, and they want to be involved

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<v Speaker 3>in some of the most impactful and consequential developments that

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<v Speaker 3>occur across the global capital markets. I think they recognize

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<v Speaker 3>that being part of our platform is a really special

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<v Speaker 3>opportunity for them to realize their potential and serve their

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<v Speaker 3>clients as best as they possibly can.

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<v Speaker 2>Does that mean it's kind of like a now hiring

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<v Speaker 2>sign for Goldman Sachs or do you feel like you

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<v Speaker 2>have what you need to get the job done for

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<v Speaker 2>next year?

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<v Speaker 1>Fair question.

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<v Speaker 3>So we're always focused on ensuring that we have the

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<v Speaker 3>absolute best people in almost every sort of sub segment

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<v Speaker 3>of our business. We feel really good about the team

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<v Speaker 3>we have at Goldman Sachs. We feel really good about

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<v Speaker 3>the depth of the team that we have at Goldman Sachs.

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<v Speaker 3>In many respects, Goldman Sacks as a talent factory. And

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<v Speaker 3>you know, I've been at the firm almost thirty years,

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<v Speaker 3>and we develop really highly talented professionals.

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<v Speaker 1>At some point they leave the firm.

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<v Speaker 3>And then there's another professional that steps right into the

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<v Speaker 3>shoes and carries on the strength of our franchise in

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<v Speaker 3>a really positive fashion.

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<v Speaker 2>A little earlier talking about how Goldman stock has risen

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<v Speaker 2>well over fifty percent this year, already, you know what's

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<v Speaker 2>going to drive the next fifty percent because you think

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<v Speaker 2>about those drivers for your stock. Is it the M

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<v Speaker 2>and A story, is it that push into asset and welp?

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<v Speaker 2>What should investors be hanging their hat on.

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<v Speaker 3>So our story at this point is pretty simple. We

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<v Speaker 3>have two world class businesses, both of which are positioned

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<v Speaker 3>to grow into twenty twenty five. On the global banking

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<v Speaker 3>and market side, the piece of the puzzle that we

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<v Speaker 3>could see incremental growth unlocked would be through ongoing capital

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<v Speaker 3>markets activity, and particularly capital markets activity that is connected

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<v Speaker 3>to strategic activity, so less by a way of plane

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<v Speaker 3>vanilla or refinancing activity if you think about the debt markets,

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<v Speaker 3>and more change of control or deal related activity, which

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<v Speaker 3>is something we're particularly good at doing for clients. We

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<v Speaker 3>can see more of that activity that will propel growth

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<v Speaker 3>across that segment. We have a global, broad and deep,

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<v Speaker 3>thick and equities business, leading positions in the equities business

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<v Speaker 3>number one top three in thick covering the whole globe

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<v Speaker 3>across products, that remains an attractive opportunity set for us,

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<v Speaker 3>and the big growth engine for the firm sits within

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<v Speaker 3>asset and wealth management, where we've communicated publicly, we expect

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<v Speaker 3>to drive top line revenue growth high single digits across

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<v Speaker 3>the durable revenue streams of management, fees, private banking, and lending,

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<v Speaker 3>and our optimism for that is is unchanged, and we

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<v Speaker 3>continue to drive margin improvement towards our mid twenties targets

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<v Speaker 3>and unlock better returns.

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<v Speaker 1>How much how.

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<v Speaker 2>Much will lighter regulation make a difference for you with

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<v Speaker 2>the expectation that things would be lighter under a Trumpe administration.

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<v Speaker 3>Should we have lighter regulation, which I think is our expectation.

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<v Speaker 3>I think it's the expectation of the markets that can

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<v Speaker 3>just reduce stand in the gears of activity across industries

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<v Speaker 3>across the.

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<v Speaker 1>Globe, give people more confidence that.

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<v Speaker 3>They can actually go out and try to affect strategic

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<v Speaker 3>change that they need to grow their business. That should

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<v Speaker 3>catalyze more activity across our franchise.

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<v Speaker 1>We in the whole.

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<v Speaker 3>Sector should be beneficiaries of that.

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<v Speaker 2>Environment, Dennis, thank you so much for joining us here

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<v Speaker 2>at your conference. Of course, this is the Golden SAX

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<v Speaker 2>Financial Services Conference, that is GOLDENZAC CFO Dennis Coleman