MAGGIE PAGANO: Goldman boss David Solomon in the spotlight

The mighty Goldman Sachs has a bumpy ride. Unlike its more diversified Wall Street rivals, Goldman derives most of its revenue from bond trading and investment banking, its two traditional strengths and the backbone of its formidable reputation as the world’s most powerful bank.

So it must be ironic that it has had such a sticky effect on fixed income trading when the rest of Wall Street has had a bonanza in recent months.

What’s worse is that traders lost about $200 million in interest rate products after the market turmoil following SVB’s collapse last month.

Paradoxically, JP Morgan Chase and Citigroup beat estimates for the first quarter, mainly because of the great trading in fixed income.

Overall, Goldman’s bond trading revenue fell sharply 17 percent, while investment banking fell 2 percent as new deals slowed. The consultancy costs were lower by a comparable amount.

With both trade and investment banking well below year-ago results, the bank released a poor string of first-quarter numbers that missed analysts’ forecasts, sending shares down as much as 3.6 percent — not a good outlook for the US. the world’s most connected banks.

Earnings fell $3.1 billion in the quarter compared to $3.83 billion a year ago, while revenues were 5 percent lower at $12.22 billion.

Goldman’s recent foray into consumer banking turns out to be more than a disaster.

It has already cut about 3,000 jobs in the division, reshuffled management and took a roughly $470 million hit on the partial sale of its $4 billion Marcus loan portfolio.

Goldman is trying to settle more of the consumer business and questions are now being asked about other credit card partnerships, such as the one with Apple.

That raises the question of the future of the deal just struck with Apple for its new savings accounts, which offers customers a whopping 4.15 percent interest on their accounts.

Goldman’s DJ boss David Solomon is already under fire for trying to diversify from his trading arm and investment bank into more of a financial supermarket.

As these results show, focusing on those dual strengths means you’ll always be more vulnerable to boom and bust.

Ironically, though, it may very well be that by trying to shift focus to a wider-based bench, Solomon and his henchmen may have taken their eyes off the ball.

Who knows what impact this has had. What is certain is that Solomon’s strategy is in the spotlight. Investors won’t be happy with the blow to Goldman’s return on tangible equity.

Solomon hopes investors will give him time to spin a few more of the electronic dance music discs he loves before showing him the door.

Cash is still king

The speed at which we are moving towards a cashless society is astounding. Contactless card payments are used by almost 90 per cent of the population and make up almost a third of all payments in the UK.

About a third of all adults use mobile apps such as Apple Pay or Google Pay. Seven million consumers and 750,000 small businesses use Open Banking products.

Still, cash is essential for many. Sir Jon Cunliffe of the Bank of England estimates that one in five of us still prefer it for payments and that more than 1 million people rely on it for their day-to-day expenses, often the elderly and the more vulnerable.

That is why the deputy governor made it clear early this week in a speech on the future of digital money that the Bank will “continue to issue money as long as there is a demand for it”.

This sounds reasonable and encouraging. But think again. Shouldn’t we be concerned about those last few words, “ask about it”? Who assesses that requirement? And how is it measured? Is it 1,000 people or ten?

The Bank must go further and promise that there will always be physical cash in circulation. Without a physical asset to store, we lose all freedom.

Open markets

GSK’s Emma Walmsley has struck another smart deal by acquiring Canadian-based Bellus Health, an advanced-stage respiratory medicine specialist.

That’s a bit hypocritical, you might say, given our criticism of the takeover frenzy of foreign predators for British companies.

How can you have one rule for one and another for the other? But it’s not contradictory. Overseas capital flow is good for business.

The problem for the UK is that too many companies are being sold cheaply, undervalued by their own investors. That is the difference.