New York: Goldman Sachs Group Inc has named senior trading executive Harvey Schwartz to replace David Viniar as chief financial officer, the latest in a series of executive shuffles as the investment bank prepares for a change in top management.
Schwartz, 48, is among a small group of executives who are considered potential candidates to take over as chief executive when Lloyd Blankfein eventually steps down.
When Schwartz starts his new job at the end of January, he will replace the longest-serving CFO on Wall Street.
“He is incredibly qualified for the position,” said Jason Graybill, a senior managing director at Carret Asset Management, which owns Goldman bonds. “These banks are not in the go-go growth modes they were in the 80s, 90s and early 2000s.”
“It’s a merit-based promotion and sort of a next-generation promotion,” said a Goldman source who knows the top executives at the firm.
“Harvey’s definitely on the short list of people who could be CEO one day,” said the source, who declined to be named because he was not authorized to speak to the media.
Blankfein’s eventual departure as CEO has been a subject of speculation for months. Over the past year, Goldman has been cutting staff to manage costs while moving younger bankers and traders into senior roles.
Goldman president Gary Cohn has long been viewed as a favorite for the job, but other executives including vice chairmen J. Michael Evans and Michael Sherwood, investment banking global co-head David Solomon and Schwartz have all been mentioned as possible contenders.
Blankfein has said that while he has no intention of stepping down in the near-term, he already has a candidate in mind to take over his job.
Viniar, 57, will join Goldman’s board of directors as a non-independent director after the transition.
The bank currently has 10 directors including Blankfein, Cohn and Stephen Friedman, who ran Goldman while it was still a private partnership. Goldman said it also expects to name independent directors to its board soon.
Subprime Short Seller
Schwartz joined Goldman in 1997 after a stint at Citibank. He was named managing director in 1999 and partner in 2002.
Two other executives, Pablo Salame and Isabelle Ealet, share the title of global co-head of securities with Schwartz. Ealet was promoted to that position in January when previous co-heads David Heller and Edward Eisler retired.
Roger Freeman, a bank analyst with Barclays Capital, said Schwartz has been more visible with analysts and investors in recent months. His position as co-chair of Goldman’s Steering Committee on Regulatory Reform will mesh well with Schwartz’s new responsibilities as CFO, he said.
Sources familiar with the matter said Viniar had been planning to retire for at least two years, but stayed with the firm during various government investigations and high-profile controversies including the public resignation of an employee in a newspaper op-ed in March.
Viniar, known as one of the most shrewd risk managers in the business, was instrumental in developing Goldman’s strategy to short subprime mortgages in 2007. It helped the bank avoid the multi-billion-dollar losses that felled rivals, but led to an avalanche of public criticism.
He is also known for having been virtually unflappable in the face of investigations that followed.
At a Congressional hearing in 2010, Viniar was asked about an email describing in a vulgar way a trade Goldman structured for clients. He did not show regret about the substance of the message, but instead responded, “I think it is very unfortunate to have that on email.”
Viniar is among the best-paid executives on Wall Street. He earned $15.8 million last year and held 1.8 million shares of Goldman as of March 26, according to a proxy filing. Reuters