Goldman Sachs Group Inc’s (GS.N) trading division was caught “wrongfooted” last year, bracing for a return of volatility that did not materialize in financial markets, Chief Executive Officer Lloyd Blankfein said on Tuesday.
The trading division was also overdependent on a certain type of customer that became less active, Blankfein said. Goldman has traditionally relied on hedge funds and other active managers that have been struggling.
“I would say, we, last year, braced for a return of volatility and it didn’t come out,” Blankfein said at an industry conference in Miami Beach. This and the lack of activity from customers caught Goldman in a “double whammy,” he said, and the bank is making adjustments.