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28 December 2011 By Rob Cox

It has been a rough year for Goldman Sachs. With the environment still difficult, big changes can’t be ruled out. Breakingviews envisions some of the possibilities in an imagined memo to shareholders during 2012.

Fellow shareholders:

2011 was a period of strong performance for Goldman Sachs in the context of a challenging year. Despite continuing uncertainty in the global economy and the ongoing sovereign debt crisis in Europe, an unwavering focus on clients allowed us to generate net revenue of $40 billion with net earnings of $8 billion.

That was on a par with the previous year at a time when many of our competitors have struggled. But the 46 percent decline in our share price is not what you have come to expect from us. We are changing our business and management in ways that we believe will create value for our shareholders.

Among these changes has been the separation of the chairman and chief executive roles. While joining the two positions made sense in the early years of our public market listing, the regulatory and political climate that has emerged since 2008 necessitates a new approach to managing your company.

Chairman Gerald Corrigan’s experience at the Federal Reserve positions him to lead our efforts in shaping and complying with the new framework of the global financial services business. Mr. Corrigan’s new role will give Michael Evans, our new chief executive, unprecedented freedom to focus on our operations, which are also undergoing transformation. As co-chairs of our Business Standards Committee, which reported early in 2011, Messrs. Evans and Corrigan are uniquely qualified to lead our fundamental re-commitment to clients.

None of these important changes would have been possible without the support of Lloyd Blankfein, our former chairman and CEO, who now chairs Partners Capital LP, the independent asset management and securities trading business we spun off earlier this year to allow the remainder of our businesses to focus on our clients and the regulated functions of a bank holding company.

Being nimble is a very large part of our culture and our success story. Staying close to our clients and adapting our business and management to meet their evolving needs will remain a cornerstone of our long-term success.

Predictions: Breakingviews is publishing a series of articles over the holiday that look ahead to 2012. The pieces will be collected together in the annual ’Predictions Book,’ produced in print and electronic form early in the New Year.


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