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Goldman Sachs' Next CEO Replaces Finance Chief, Names Top Deputy




David Solomon is assembling his inner circle as he prepares to take the helm at

Goldman Sachs


GS -0.01%

Group Inc., replacing the bank’s chief financial officer and installing a longtime lieutenant as his top deputy.

Goldman on Thursday named John Waldron as its president and chief operating officer and Stephen Scherr as its new finance chief, replacing Martin Chavez, who has been in the job just over a year.

The shake-up, which was earlier reported by The Wall Street Journal, shows Mr. Solomon putting his imprint on the firm he’ll soon run and represents a triumph of Goldman’s investment bankers over its traders, who have been on the defensive since the crisis. The moves will take effect after Mr. Solomon takes over for outgoing Chief Executive Lloyd Blankfein next month.

Mr. Chavez, a computer engineer who came up through Goldman’s trading arm, will return to that division as one of three co-heads. He approached Mr. Solomon earlier this summer and suggested the move, according to a person familiar with the matter. Wall Street banks are leaning heavily on coders as more trading goes electronic, and Mr. Chavez has been a champion of Goldman’s push to open up its internal technology to clients.

He leaves the CFO job after an 18-month tenure in which Goldman stumbled in the Federal Reserve’s annual stress tests and disappointed investors by reducing its stock buyback. On quarterly conference calls, Mr. Chavez’s answers at times failed to reassure shareholders unnerved by Goldman’s trading woes and its expansion into new businesses.

Mr. Waldron, 49 years old, co-heads Goldman’s investment-banking arm, which generates about a third of the firm’s profits. Mr. Scherr, 54, is overseeing its push into Main Street banking. Both men cut their teeth at Goldman in capital markets, the business of helping companies raise money and the same place Mr. Solomon got his start.

Their promotions would put investment bankers in each of Goldman’s senior-most roles for the first time in decades, capping a power shift since the crisis. Mr. Blankfein, a former trader, rose in the 2000s as that business boomed. Along the way, he promoted trading-floor comrades including Gary Cohn, Harvey Schwartz and Mr. Chavez to the executive suite.

But trading revenues have fallen sharply since the crisis, and Goldman’s axis of power has tilted toward its investment bankers, who broker corporate mergers and underwrite stock and bond offerings. Messrs. Cohn and Schwartz have both left, and two top trading executives close to Mr. Blankfein retired earlier this year.

The promotions of Messrs. Waldron and Scherr cap a swift rise for both men. Four years ago, Mr. Scherr was Goldman’s head of strategy, a backwater assignment for a bank that has rarely made big changes or chased major acquisitions. Mr. Waldron had just returned from a stint in London and was tasked with reviving a client-coverage effort that had fallen by the wayside.

With their elevations, they will join a rarefied circle. Despite its postcrisis challenges, Goldman remains an elite firm, with a grip on Wall Street and Washington that ensure its executives a voice in pressing matters.

Mr. Waldron has been one of Mr. Solomon’s closest confidants for more than two decades. The pair worked together at Bear Stearns in the 1990s, and Mr. Solomon, who came to Goldman in 1999, soon recruited his protégé to join. They have neighboring vacation homes in the Bahamas and travel in overlapping social circles, stacked with financial and business bigwigs.

Mr. Waldron covered media and telecom companies — he’s a top adviser to Rupert Murdoch — and was promoted to his current job in 2014. (Mr. Murdoch is executive chairman of News Corp, which publishes the Journal.)

Mr. Scherr isn’t personally close to Mr. Solomon but holds the keys to Goldman’s budding consumer and commercial banking businesses, a top priority for the firm. Like Mr. Waldron, he spent his early years at Goldman as a banker to media and telecom companies, and he later oversaw its business in Latin America.

He is now steering Goldman’s push into Main Street businesses including credit cards, commercial banking and wealth management — a high-stakes bet that the firm can succeed in areas where it has little experience.

The elevation of Messrs. Scherr and Waldron will open seats lower down at Goldman, though they aren’t expected to be filled immediately. A leading candidate for Mr. Waldron’s job as co-head of investment banking is Daniel Dees, who currently runs technology banking from California, according to people familiar with the matter. Mr. Scherr’s successor is less obvious, and Mr. Solomon might look to hire from the outside.

Write to Liz Hoffman at liz.hoffman@wsj.com



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