Conference Presentation, Keynote
International Strategy - Goldman Sachs 2020 Investor Day
- Richard Nutter, CEO of Goldman Sachs International, outlined a five-decade history of organic international growth, starting with the first London and Japan offices in January 1973, resulting in a 20-fold revenue increase to $15 billion.
- The firm's international footprint now accounts for over 40% of total revenues with a 28% pre-tax margin (including a 5 percentage point litigation impact), proving the strategy is accretive to the overall firm.
- Goldman Sachs maintains a diverse leadership team with 42% of partners and managing directors located outside North America, representing 80 different nationalities with an average tenure of 13.5 years.
- The "One Goldman Sachs" model enables cross-border execution, evidenced by 39% of M&A volumes and 20% of global markets client activity occurring outside the client's home region over the last five years.
- Specific client success stories include the transformation of Ørsted (formerly Dong Energy), which achieved a three-fold market cap growth through strategic private equity, infrastructure, and investment banking integration, and support for CK Hutchison's global expansion.
- In M&A, the firm holds the number one market share globally, though leadership positions vary by region, requiring targeted growth efforts in Latin America and other underpenetrated areas.
- The firm's global markets equity market share in the Eurostock 600 grew from 8% to 15% (a 1.9x increase) over three years following significant investment in execution capabilities post-MIFID II.
- Strategic expansion efforts include adding over 500 corporate coverage clients in the €500 million to €2 billion size range in Europe, resulting in 170 new mandates, and launching onshore Fixed Income & Capital Markets (FIC) in South Africa.
- Goldman Sachs launched an onshore FIC business in South Africa and an equity business in Saudi Arabia prior to the latter's inclusion in MSCI and FTSE Emerging Markets benchmarks.
- The Marcus UK digital consumer banking platform raised $7.6 billion in deposits and acquired 400,000 new accounts within less than 18 months, demonstrating brand competitiveness outside the US.
- Operational efficiency is driven by support centers in Bengaluru (over 5,000 employees), Singapore, and Warsaw, which facilitate digital transformation and process automation across all time zones.
- In Continental Europe, headcount increased by approximately 70% in the EU27 region over the last three years (compared to 13% overall European growth) to capitalize on opportunities in bank capital markets, negative rates, and the banking union.
- Japan remains a top-three contributor to firm revenues by country over the last five years, with merchant banking teams deploying $6 billion of capital over 25 years to generate a $7 billion return.
- Goldman Sachs ranks as the number one foreign bank in China for M&A and equity underwriting, having invested $10 billion to drive $15 billion in value creation over 25 years.
- Goldman Sachs Research projects China's revenue pool across all business lines will exceed $100 billion by the mid-2020s, driven by early privatization waves and growth in the private sector.
- The firm plans to secure 100% ownership of its onshore China joint venture, having maintained effective management control since 2004, which will provide a head start over competitors in a fully integrated global network.
- Alternative investments show significant international scale, with 400 professionals across 18 countries managing $110 billion in assets, including over $20 billion in developing markets, supporting a $100 billion fundraising target.
- Alternative asset successes highlight geographic and sector diversity, including investments in Taikai Insurance (China), IQ Student Accommodation (UK), Nexi (Italy), and oncology centers (Brazil).
- International Private Wealth currently holds a 1% global market share compared to 7% in the US; a 1% increase in international share would add $170 billion in client assets.
- Market conditions for Private Wealth have improved due to raised global standards on tax transparency and money laundering, allowing Goldman Sachs to re-engage with clients previously excluded.
- The firm plans to increase the number of advisors in its International Private Wealth business by 50% across Europe and Asia in the coming years to scale the proven model.
- Recent International Private Wealth performance includes 2019 record revenues and profitability, supported by over 200 advisors and $150 billion in client assets, now enhanced by new international lending capabilities.