The Goldman Sachs Group, Inc. (GS) Earnings Call Transcript & Summary

Good morning, and welcome to Goldman Sachs. I'm Heather Miner, Head of Investor Relations. Today is an important day for us. We've had a storied 150-year history, but today is our first Investor Day. We are thrilled to open the doors of our global headquarters and welcome you inside. Also, a very warm welcome to many of you joining us virtually. We are proud of the efforts that culminate in the discussions you will hear today. We will deliver a clear message that we are focused on driving shareholder value through greater business diversification, more fee-based revenues and higher and more sustainable returns. We will do that while staying true to our heritage as risk managers and grow this firm in a thoughtful and measured way. We believe our strategy is in clear alignment with your interest as our stakeholders, which makes it an exciting story to share today. Today is an important step. It started over a year ago when David, John and Stephen took their seats, but it's not a destination. We will continue to solicit and implement your feedback, improve our disclosure and keep you updated on our progress over time. One of the key themes that you'll hear today is that at Goldman Sachs, people are our greatest asset. You'll hear from dozens of my colleagues around the firm. The average tenure of our speakers here today is 20 years at Goldman Sachs. In addition to David, John and Stephen, you'll hear from our division heads, from our Chief Strategy Officer, our Chief Risk Officer, our Global Treasurer and many other senior leaders. These individuals will bring our forward strategy to life and share in the energy and optimism we have for the future of Goldman Sachs. So let's get to our agenda today. David, John and Stephen will each present this morning. David will present our forward strategy, our financial targets and the competitive advantages that will drive our success. John will highlight execution priorities across our business, and the key metrics we'll track to watch our progress. Stephen will then unpack our financial targets, talk about scarce resource allocation and risk management. After a short break, we'll be back here at 10:00 a.m. for presentations from Investment Banking, Global Markets, Asset Management and Consumer & Wealth Management. At 12:15, we'll have lunch in the Sky lobby with senior leaders from across the firm. We'll be back here at 1:15 for sessions on international strategy and innovation. We will regroup with open Q&A with David. And I kindly ask you to hold your questions for that session. We'll then have breakouts on risk management, fixed income investor relations, the future of market structure and sustainability. And finally, we'll end the day with a cocktail reception, and I hope that many of you will stay and join us for that. We're particularly excited to highlight our technology showcases around the firm today that are organized by client types. There's 3 installations here on the ground floor for technology that serves corporates, institutions and consumers. There's a fourth installation on the 11th floor Sky lobby, our innovation cube, which really speaks to the culture and history of innovation at Goldman Sachs. I encourage you, visit the demos, interact with our engineers and product specialists and learn about the differentiated capabilities that Goldman Sachs is delivering to our clients. I'll end on a few housekeeping notes. There's WiFi information on the back of your name tags. There are chargers in front of you. Please silence your phones. If you haven't, you can download the Goldman Sachs Investor Day app, it's customized for your experience here today. It includes our agenda, presentation materials and the bios for our speakers. All presentation materials are also available on the Investor Relations portion of our website. Please note, legal disclaimers and investment risks are available in those presentation materials, and of course, today's discussion will include forward-looking statements, but I'm pretty sure that's why you're all here. Through the lens of sustainability, we are paperless in the auditorium today. If you need a tablet, please visit the information booth outside. We are thrilled to have all of you at Goldman Sachs today. And with that, let's get started.

Good morning, everyone, and welcome to Goldman Sachs. I am really, really excited to have you all here today. And super excited for us to host our first Investor Day. We're all very grateful for you taking the time to spend the day with us. As Heather just mentioned, we're going to ask you to hold your questions until the end of the day. That said, you should feel free to break into open applause anytime it suits you. Today is about our path forward. Our goal is to clearly communicate our strategic direction, our plans for execution, our financial objectives and our paths to achieving these goals business-by-business. And all of this comes in the spirit of communicating directly with you about the ways in which we believe we can drive greater shareholder value. So let's get started. Having just marked our 150th anniversary, we've spent a lot of time thinking about, what does Goldman Sachs stand for? How do we articulate our purpose in the world? What's unique about this firm? What makes Goldman Sachs special? And this comes in a moment when I believe that all companies need to more clearly explain their purpose and their values to their employees, to their clients, to their shareholders and to their communities. It's about having a north star that guides your strategy and enhances your culture. So simply put, our purpose is to advance sustainable economic growth and financial opportunity. We are proud advocates for capitalism, and we understand the extraordinary benefits that economic growth brings to all of us. We are passionate about our role in the world, and we believe this sense of purpose is motivating and inspiring our people. In addition, we believe that this focus resonates with our clients who themselves are increasingly mission and purpose driven. So how is GS positioned to deliver on this? We put capital and ideas to work to expand the potential of organizations, accelerate global economies and amplify personal prosperity. Delivering on this purpose means marshaling all of the people and all of the resources of Goldman Sachs to serve clients more broadly, more effectively and more efficiently. If we can do this, we have a deep conviction that we will, over time, deliver value to our shareholders. This clear sense of purpose is fed by a sense of long-term values. In 1979, John Whitehead, wrote down 14 business principles, which have codified our distinctive culture. These principles still inspire us today. But in the spirit of simplicity, we've distilled them down to 4 core values: first, partnership. This value speaks to our legacy, but most importantly, it drives the way we interact with each other, with our clients, with our investors and with our communities today. Our partnership ethos fosters a sense of ownership and stewardship that we believe is unique and differentiated, driving collaboration, inclusivity and teamwork and inspiring us to put clients at the center of everything we do. This brings us to our second core value, client service. Having personally spent decades building relationships with our clients, I know how much value can be created for our clients and for the firm through exceptional long-term dedication to serving clients' needs. Let me give you just one example. As a firm, we've worked for 2 decades with Disney. When we asked Bob Iger for his views on working with Goldman Sachs, he said, "While it has been highly productive from a transactional perspective, it is our connection with the people at Goldman Sachs that has produced the most value. We deeply respect and appreciate their advice, their knowledge and their feedback". Deep and respected client relationships like these are born from our third value, integrity. I am personally laser-focused on this. We must always have an unrelenting commitment to doing the right thing, always. In the wake of our experience with Malaysia, I am keenly aware how the actions of a few can harm our reputation, our brand and our performance as a firm. Finally, excellence. Commitment to excellence is a mindset that permeates this organization. It informs the kind of people we attract, the advice we give, the way we strive to meet our clients' expectations. Every day in this firm I get excited as I see people going the extra mile, pushing their limits and working together just to make things better. I recently had a discussion with Marco Argenti, our new Co-CIO, who joined us from Amazon Web Services. I asked Marco about his impressions at the firm. He told me he was most impressed by the level of talent at the firm and how exceptionally dedicated and hardworking the people of Goldman Sachs were. So these values: partnership, the client service, integrity, excellence are the backbone of our culture. They also, in our view, have driven some fundamental competitive advantages for the firm. Built up over 150 years, these advantages are defining, they're durable and they're self-reinforcing. So I wanted to spend a couple of minutes touching on them now. First, we've built a global presence, allowing us to serve clients everywhere that matters to them. We stand at a point today where our international revenues have grown 22-fold since 1990 and now represent 40% of our overall firm-wide revenue. We have the right people, in the right places around the globe in a model that we think is efficient and effective. We are known for quality, depth and duration of our relationships with corporations, with institutions, with individuals. We're taking a long-term view, and we understand that great relationships require investment and patience. We've done survey research recently to better understand our clients' experience with the firm for the last 10 years. Our clients have consistently rated us as having the best people relative to our peers by a wide margin. With our most recent survey, showing a 20 percentage point gap to our nearest competitor. Our research also tells us that Goldman Sachs is the #1 firm our clients would recommend to peers for business. I've mentioned the exceptional talent at the firm, and I frequently hear that our people are differentiated, and I know firsthand, from my own interactions, how truly exceptional they are. We've created an ecosystem that attracts and develops our people, giving them platforms to thrive and grow. The group of presenters you'll hear from today illustrates this strength. These leaders will tell you about businesses that have innovated for decades, inventing new categories, new approaches, new products. Innovation has never been more important than it is today, and we are deeply focused on the mechanisms that encourage fresh and creative ideas. And you'll hear more about this from Stephanie Cohen, our Chief Strategy Officer; and Marco, who I mentioned just a few minutes ago. Our history, our people, our ideas have made Goldman Sachs an aspirational brand around the globe. A brand that has proven very influential with institutions and in corporate boardrooms. But it also translates and resonates with new and different clients, such as consumers who are attracted to our products and services. Finally, our attention to risk management forms one of our most important and distinctive advantages. Risk management means protecting not just our capital, but our reputation as well. We leverage strong processes, deep analytics, empowered risk and control functions and a culture of honesty and direct communication. Stephen will talk more about this, but I want to impress on all of you how personally important this capability is to me. From my perspective, the depth, interconnectedness and durability of these advantages is unparalleled in our industry and makes us one of the most distinctive companies in the world. At the same time, this is a place that always seeks to improve. We've discussed our purpose, history, core values, some competitive advantages. I now want to talk about the changes we're making to drive Goldman Sachs forward. First, we're seeking to increase our transparency. Better transparency will improve all of your understanding of our business. It will improve visibility into our activities, and it will enhance our own accountability. Some examples of this commitment include our new segment reporting, our new approach to earnings calls, and obviously, the fact that you're all here today. We're also trying to be more open and accessible, both internally and externally. This has led to tangible changes like modernizing our work environment, engaging more actively with the media and our communities and encouraging people to express themselves authentically. These cultural and symbolic shifts have the effect of humanizing this organization while expanding and enhancing our brand. But perhaps most importantly, they play a meaningful role in making sure we continue to recruit and retain the very best talent. As an organization, we're also seeking to become more dynamic. To me, this means making decisions more quickly, be more flexible and striving for progress, not always perfection. But make no mistake, we remain committed to excellence in everything that we do. But in the world that we live in, we must move faster, and we must be willing to experiment more. I also want the firm to be more long-term in its thinking. We have long prided ourselves on being nimble and reactive, and these qualities are hugely valuable. But my goal is to shift the culture a bit more in favor of institutionalizing and incentivizing long-term thinking. The investments we are making will require patience and fortitude. We are planting seeds that will take time to mature and grow. Our new 3-year planning process and the targets we will share with you today are emblematic of that commitment. We think this orientation will allow us to deliver greater value to our shareholders over time. So there are a number of things we're trying to evolve at Goldman Sachs. But from my perspective, the most significant change we've set in motion, since I've assumed the seat, is a major effort to reinforce our deep client orientation throughout the firm. We call this effort One Goldman Sachs. One Goldman Sachs is a firm-wide effort to simplify the way we engage with our clients and deliver all of our capabilities in a more holistic fashion. It's a huge strategic priority for us and one you'll hear more about from each of our leaders on the stage today. In particular, John will give greater detail on our efforts in this area. Historically, we've been able to deliver our capabilities -- the broad capability of the entire firm, to a set of big complex clients. Let me give you one example that illustrates the power of this approach. And it's suggestive of the opportunity if we can apply this approach much more broadly across the organization. We've developed an extraordinary relationship and partnership with Apple over many years. But very interestingly, we did not participate in the Apple IPO. That was a missed deal. However, Apple turned to Goldman Sachs in the mid-1990s, during a very difficult time for that organization. At the time, we led the industry's first-ever overnight convertible bond deal. It was a deal that allowed Apple to invest in its future transformation. By the way, that innovation became a product that's an everyday part of the capital markets today. Over the next 25 years, we advised Apple on a number of high-profile strategic and financial transactions, on shareholder activism, on capital allocation. To put it in perspective, we helped them raise more than $125 billion of debt, we executed numerous transactions that have led to having Apple become the largest share repurchase program in history. And most importantly, today, because of the foundation of that relationship, we've been able to partner with Apple on our new credit card offering, which is a key component of growing our consumer business. So we've been able to deliver strategic advice, capital markets and security service, investment management capabilities and a consumer partnership, all on a fully coordinated holistic [ model ]. We have the opportunity to do this for so many more clients, building relationships that are characterized by depth, breadth and consistency. So far today, we've talked about who we are, what we believe makes our firm unique and some of the changes we're making. Now let's discuss where we're going in the future. First, I'd like to talk about the environment we operate in today and the way we perceive the world's evolving around us. This forms the basis for our strategy and our approach to operating our business. We are living in an era of enormous change. Technology continues to advance profoundly, giving us the ability to transform existing businesses and access new profit pools with platforms that scale. Perhaps there is no group where this is more evident than with consumers. The consumer today has access to sophisticated capabilities in the palm of his or her hand. There are vast opportunities, not just to extend, but also to simplify these capabilities. We think we are still in the early days of this revolution in financial services, creating a big opportunity for our firm. We have lived in an era of globalization. But today, things feel a little more complex, a little more unpredictable. In this environment, more clients want to turn to Goldman Sachs for our perspective. Corporations continue to be focused on their bottom line, laser-focused on their bottom line. But to drive that in the long term, they must do so sustainably and responsibly. This is leading to a change in investing strategies, governance models and broad corporate strategy. Sustainability is a significant priority for us here at Goldman Sachs. That's why we recently announced a $750 billion financing, investing and advisory target across 9 key growth themes for our clients, including clean energy and accessible and innovative health care. And you'll hear later from Gregg Lemkau, about our new IPO requirements for Board diversity. We'll continue to be at the forefront of these changes and well positioned to help our clients navigate in this new world. The rapidly evolving landscape creates an enormous opportunity for our firm. This environment also dictates a new approach to operating the business, and I'll briefly describe some of these changes, several of which I've already touched upon. Rapid change and global complexity make it imperative to bring all our capabilities to clients in the spirit of One Goldman Sachs. The scale and the scope of the opportunities ahead of us require us to adopt a more long-term minded -- more long-term focused mindset, which is exemplified by our new 3-year planning process. This opportunity necessitates a commitment to investing for growth, tolerating J-curves and staying committed to new initiatives. Finally, all these dimensions mandate that we operate more transparently with you, thereby driving much greater accountability. This new operating approach is consistent with our 3-part strategy, which is already in execution mode. The strategy is simple, clear and has driven tremendous alignment for our leaders and for our people. This framework, I think, will be familiar to most of you. We have a powerful portfolio of existing businesses and we see opportunity to grow and improve them all, leading to more wallet share and higher revenue. We see several opportunities to diversify our business, grow new platforms and drive more durable revenues. And we will operate these businesses more efficiently, driving better returns for our shareholders. If this seems simple, that's the point. Simplicity allows for clean and focused strategy. When you hear from our business leaders today, these will be consistent pillars driving their forward plans. After thoroughly reviewing our franchise, we concluded that we have incredible foundation that clearly has room to grow. Our current businesses have leading market positions, operate from a position of strength with products and services that they provide to our clients. We have the undisputed #1 Investment Banking franchise. We have a leading Global Markets business. We have a top 10 global active Asset Management business with leading positions across the full spectrum of assets. We have the premier ultra-high net worth -- ultra-high net worth Wealth Management business here in the United States. The aggregate is a unique ecosystem that differentiates Goldman Sachs from the firms that we compete with. We are committed to these businesses and each has substantial room to grow. We are already executing on extending our Investment Banking footprint. We are optimizing our Global Markets business to produce higher returns and are harnessing technology that allows us to better serve our clients. We can scale our Asset Management business by partnering much more broadly with asset allocators, and we can grow our ultra-high net worth platform in Europe and Asia. As I mentioned, we also see meaningful areas for growth in new businesses. Before describing those, I thought I would share the way we evaluate opportunities for growth at the firm today. First, new businesses must spring from an expressed client need. Second, they should capitalize on some or all of the competitive advantages I laid out to you earlier. And third, they should be adjacent to, and build upon, one or more of our existing businesses. From a financial perspective, we target opportunities that produce more durable revenues, are capital-efficient for us or enhance our funding mix. Applying this framework has led to 4 big opportunities: transaction banking; third-party alternatives; digital consumer banking and high net worth wealth management. I'll touch on these briefly for a moment now. But throughout the day, John and the business leaders will describe all of these in great detail. First, transaction banking, which is aligned with our corporate franchise. With Goldman Sachs as the first customer, we have already processed more than $3 trillion of payments across 5 currencies. And we're starting to roll this offering out to our clients in the coming months. Second, our alternative Asset Management business. We've had a strong presence in this business for a long time, but we believe we can grow it meaningfully, allowing us to capitalize on a global secular growth theme. Third, we're building a digital consumer bank, digital consumer bank of the future, serving a new set of clients in a disruptive, modern fashion from a technology platform that we believe we can scale very efficiently, and we've made a lot of progress in just 3 short years. And fourth, we're broadening our Wealth Management offering to address the entire high net worth space. This initiative is supported by our differentiated corporate relationships through Ayco and our recent acquisition of United Capital. Imagine a Goldman Sachs in which one or more of these opportunities really blossoms, a transaction banking business with even a small share of a massive market, one that is larger than the entire investment banking wallet, an alternatives business, which adds $100 billion of net inflows, a very modest goal relative to the aspirations of many of our peers in this business, a fully scaled digital consumer bank with a broad suite of products and services and a wealth management platform serving clients across a much broader spectrum. Our earnings power could grow dramatically. And this organization is aligned, excited and motivated to build these businesses. So we have a great core franchise, which can grow, a series of new business opportunities that are adjacent to our core. And when you put it all together, it puts us in a position to significantly expand our total addressable market, diversify our business mix, while shifting that mix more in favor of durable businesses and creating a better platform with higher margins and a return -- an improved return profile. The opportunities for growth and efficiency that I have described to you at a high level today, position us and give us confidence to share with you the following 3-year financial targets. An ROE of over 13% and an ROTE of over 14% as the new initiatives scale and become accretive to returns over the next 3 years. An efficiency ratio of approximately 60%. This target is demonstrative of our managing expenses holistically and in a more focused manner. A CET1 ratio of 13% to 13.5%, which would allow us to return capital while maintaining it above the regulatory minimums. We recognize we're in a cyclical industry, so these must be viewed in the context of a normalized operating environment. Stephen will in his presentation provide a detailed walk-through on these targets. Consistent with our commitment to accountability, you should expect us to update you on these targets annually. But let me be clear, we believe there is meaningful upside from here in the future. The investments we're making are long-term investments. We're building an organization that we believe is capable of generating at least mid-teens returns, and that is our clear aspiration. I've shared our plans for growth, I've laid out our targets and now I'd like to comment, for just a minute, on why I'm confident in our ability as an organization to deliver. First, our people, including the importance of advancing diversity; second, our risk management culture; and third, our historical track record of success. Let me start with people. People are our greatest asset. This has been true for the last 150 years, and we expect it to be true for the next 150 years. We have an incredible success at attracting talent from campuses and laterally all the way up to partner. This is an aspirational place for young people to work. We had 85,000 applications for 2,600 campus positions this year. And the energy and appreciation for how Goldman Sachs is a great place to work extends to our alumni network, with many alumni becoming clients and referring clients to us. Our people embody our core values, and they come from a multitude of backgrounds. Our clients care about the diversity of our organization and our efforts to advance diversity, and this is a personal priority of mine. The global talent pool is evolving demographically. If we want to maintain the quality of our workforce, we need to be able to retain -- attract and retain people from all walks of life. I feel passionate about our commitment to this. As the data suggests, we're making progress, but we have more work to do. In particular, I'd like to see more diversity in the leadership positions at the top of the firm. I've been a part of the Goldman Sachs risk management culture for over 20 years. Risk management is a huge part of the DNA of this organization, apparent in everything we do: how we transact, how we interact, how we manage our business. I want to emphasize, we are risk managers. We have people and processes in place to effectively navigate the risks we face as an organization, integrated with our forward strategy. Later today, you'll hear from 3 senior leaders, Brian Lee, Sarah Smith and Sheara Fredman, whose average tenure at the firm is over 20 years, all key risk managers at Goldman Sachs. We recognize that our risk profile is shifting as we enter and pursue new businesses. For example, the growth of our consumer or financing businesses requires us to evolve and develop our already strong credit risk management culture. And of course, cyber, geopolitical risks are constantly emerging and shifting, and we need to stay very focused on all of these. Importantly, when things do go wrong, and invariably, they will, we are focused on learning, reflection and self-improvement. To me, this is the essence of a great risk management culture. So I spent the morning describing a number of changes we want to make at Goldman Sachs and illustrating a number of new growth opportunities ahead of us. One of the reasons I have such confidence in our path forward is that the firm has a long tradition of transformation and growth. We have a long track record of entering new markets, building new businesses, and creating world-class franchises. You'll hear more about some great examples of this throughout the day. So the quality of our team, the depth of our culture, our track record of innovation give me great confidence in our ability to deliver on these 3 strategic pillars I showed you earlier. And across each of these 3 pillars, we have a set of goals, of milestones, that we want to share with you. These items will be drawn out over the course of the day, as John, Stephen and the rest of our business leaders share their more granular execution plans with you. So let me close by telling you how excited I am about the future of Goldman Sachs. Today, you will see and hear a management team that shares this fundamental optimism and is committed to an ambitious long-term vision of what Goldman Sachs can become. Thank you again for being with us today. I will see you all later when I return to the stage for Q&A, enjoy the day. Thank you very much.

Good morning. I'm John Waldron, it is my privilege to serve as the President and Chief Operating Officer of Goldman Sachs. I've been at the firm for 20 years, serving in a number of global leadership roles, including leading our leveraged finance business during the financial crisis, running our global investment banking sales force and, most recently, leading our investment bank. I built my career collaborating with a number of our most important leaders across the firm, including many of those that you will see and hear from on the stage today. We are a close-knit group who grew up together in the firm. And we now have a unique opportunity to lead this great institution forward. As David outlined our strategy and the competitive advantages that position us for success, my goal this morning is to offer you a window into how we are executing on that strategy, driving long-term value for our shareholders. So I want to take a moment to talk about how I approach my dual role, which I think informs our broader operating approach as a firm. So I carry 2 titles, President and Chief Operating Officer. As the President, I am constantly engaging with our most important clients around the world. Getting a firsthand sense for the relative strength of our franchise as well as the investments we need to make to become even more valuable in serving our clients going forward. As the Chief Operating Officer. I'm focused on driving excellence and discipline across our businesses, ensuring that we are well positioned to execute on the 3 elements of our growth plan: strengthening our core franchise, investing for growth, and driving operating efficiency across our organization. So before providing more detail on this growth plan, I think it's important to highlight that the value of our franchise relies on several foundational components. We benefit from an unparalleled brand in financial services, a brand that has important resonance in the world and positively impacts all of our activities, including the trust we are afforded by our clients. A trust that is earned over many years. This brand is part of our heritage. And as we see it, protecting and building upon it as a top priority for this management team. One Goldman Sachs is our underlying organizational philosophy about putting clients in the center of our activities. Now throughout my career, I've stressed the importance of listening to the client and responding to their needs always with a long-term orientation. Simple, but really powerful. In my mind, One Goldman Sachs is about applying that philosophy to everything we do across the firm. And our engineering capabilities, which are a critical driver of our strategic priorities. We cannot be a leading global financial services firm without also being a world-class engineering organization. And you'll hear us speak a lot today about how we are using technology to drive the next wave of innovation in financial services. And finally, our talent, which underpins our ability to execute at a high level. David spoke about our people are the single greatest asset in this firm and we are fortunate to have an extraordinarily experienced group of long-tenured leaders, increasingly supplemented by key strategic hires from outside the firm. And we continue to invest in our next-generation leadership group through more tailored development plans and a more intentional use of mobility to cross-pollinate those leaders throughout the firm. So let me drill down on how we intend to execute on this strategy. Goldman Sachs has always been a results-driven organization, and we are now focused on the precision around our performance and how that fits into our long-term priorities. So let's start with our core businesses. We have the preeminent investment banking franchise built over many decades, which is a strategic position that would be extremely challenging to replicate. This franchise has unparalleled relationships with corporations, financial institutions and governments all over the world. We have more trusted adviser relationships with corporations than anyone else in our industry with a premium strategic advisory platform that over the last 5 years, on average, has generated roughly $1 billion more in merger revenues than our nearest competitors. Now while we've successfully grown this business, we see even more opportunity ahead of us. We are the #1 investment bank, but we are not #1 in every industry and geography globally. We've identified real gaps and opportunities where we know we can improve upon our relative position. You'll hear later this morning from Gregg Lemkau, who's Co-Head of our Investment Banking division, about our plans to deepen the penetration with our corporate client base, including a methodical approach to tracking our relationship progress with individual companies on a quarterly basis, redeploying our talent and making key strategic hires to close wallet share gaps. We're also continuing to expand our footprint, an effort we started in 2017, which will result in a 30% increase in the number of companies that we cover. Now investment banking is truly the front end of Goldman Sachs and a key element of our firm-wide strategy is improving the access the rest of our firm has to this great corporate franchise, including sourcing more investment opportunities to service our alternatives business, coordinating even more closely with our private wealth advisers, delivering risk management capabilities through our Global Markets expertise and opening the doors to establish the value proposition for our transaction banking platform. We are absolutely emphasizing a more purposeful One Goldman Sachs effort here, which we believe will have a clear multiplier effect on the revenue opportunity for the firm. Now turning to Global Markets. We are one of the few scaled players across both FIG and equities in our industry, offering our clients differentiated risk intermediation and analytics and increasingly technology capability. We believe our leadership position here is strategically important for the firm. And over the last 15 months, I've heard very consistent feedback from our institutional clients about this franchise that we have best-in-class people and a broad set of capabilities that are very important to them. But I've also heard very consistent feedback that we've historically made less investment in long-term relationships, and we've been too siloed in our approach. We are working very hard to change that. We're focused here on a broad-based plan to deliver industry-leading returns in our Global Markets segment. Now there is no silver bullet here. We're going to need to pull multiple levers to improve our client rankings, increase our revenues and reduce our costs, 3 key elements in the formula of improving our returns. You'll hear later this morning from Jim Esposito and a Ashok Varadhan, 2 of our heads of Global Markets business, about how we are bringing more discipline in tracking our progress, including an effort we're launching to measure our progress in our top 3 rankings with 100 largest institutional clients in this business. There are too many large-scale clients where we rank outside the top 3, and we intend to fix that. We're also going to measure the increase in our provision of financing as a proportion of our total activity with these clients as well as the utilization of our key technology platforms. You're going to hear a lot today about our Marquee platform and our bond pricing engine as well as the technology systems, we are building to better serve our equity clients globally. Now while focusing on these revenue growth items is undoubtedly important, actually, the largest sources of improved returns here will be generated through savings in our operating expenses and an improved funding mix. And executing on this broad-based plan will put us on a clear path to delivering an ROE that exceeds 10% over the next 3 years, which will have a meaningful impact on our firm-wide returns. Now let me turn to our Asset Management business, a true global, broad and deep franchise. We've built this scale business over the last 30 years, and we are well positioned for the future. Here, we provide our clients a full suite of products and capabilities. And we are the only player in the world with true scale in both traditional asset management as well as in alternatives with $2.3 trillion in assets across this platform, including $320 billion in assets in the alternatives area. Tim O'Neil and Julian Salisbury, who are responsible for our Asset Management businesses, will walk you through their growth plans. But in essence, we're focused on 4 key priorities. Strengthening our distribution capability with a clear investment in our sales force to deepen our relationships. We're particularly focused on improving our relationships with large public institutions in the United States, which will be increasingly important as we build our alternatives business larger. We're also looking to partner with large asset allocators, delivering them more holistic and tailored solutions, while continuing to enhance our portfolio management talent and systems to drive consistent investment performance over time. Now our plan here is to increase our traditional assets by $250 billion over the next 5 years, an important source of fee-based recurring revenues for the firm. And finally, our Consumer & Wealth segment, which is home to our ultra-high net worth franchise. I appreciated the quality and strength of relationships in this franchise when I was running Investment Banking. But I have to say, my admiration for this business has grown exponentially since moving into my current role. We have trusted advisory positions here with an extraordinary set of clients, clients that rely on us to manage their wealth. In addition to advice, we provide our clients with differentiated access to Goldman Sachs investments, including our alternatives capabilities. Unlike in investment banking, where we have substantial wallet share, private banking is a highly fragmented marketplace, where Goldman Sachs has a 3% share and a $26 trillion global market. We are very excited about our prospect to grow our private wealth franchise, and we are expanding our adviser footprint by 30% globally over the next 3 years. We also see a clear opportunity here to do more with our existing clients, including increasing our lending penetration, particularly with those clients outside the United States. But this is now a stand-alone business segment, so you can track the metrics we're going to hold ourselves accountable for, and ultimately, track our growth in assets here. Now as you heard from David, our growth plans extend well beyond strengthening these core franchises. In each of these 4 growth priorities, we are executing on a very clear strategic plan. I will walk you through these 4 initiatives at a high level now, and my partners will provide more detail on each over the course of the day. First, our transaction banking platform. Goldman Sachs is a long-time customer of transaction banking services, and it is through this lens that we see a clear opportunity to improve upon the industry's existing offering. This is a highly fragmented global market where no single player garners a 10% share, an $80 billion revenue pool in the United States alone, with $5 trillion in corporate deposits, and we are very well positioned to succeed in this market. We start in a trusted position with corporations, which solidifies our seat at the table. And we are building a differentiated offering for our clients with an ability to price the deposits competitively, creating valuable funding for Goldman Sachs. I believe this transaction banking capability will be a compelling addition to our broad product and service offering for our corporate clients. And the combination of this scaled market opportunity and our clear value proposition gives me real conviction that we have a clear ability here to build a very large-scale business where even with modest share in this highly fragmented market, we can build a valuable business for Goldman Sachs with $50 billion in deposit balances and $1 billion in revenues. Next, I want to talk about our opportunity to reshape and grow our alternatives platform. This is a $6 trillion market, which has seen 50% growth over the last 5 years, as investors continue to allocate more capital to this asset class. We see here a secular growth opportunity, where Goldman Sachs is extremely well positioned. We have a 30-year history as a successful investor in alternatives. It's a core part of who we are. The merchant banking DNA runs deep at Goldman Sachs. We have substantial competitive advantages here, including a powerful sourcing engine across the broader firm, particularly in our Investment Bank. We are also unique in the size, scale and breadth of our global investment team. And we benefit from the synergies with our Private Wealth business, a unique and very valuable channel for fundraising. Now I've seen the power of this franchise in action on numerous occasions over my 20-year career. Let me highlight one great recent example. When I was running Investment Banking, we advised on the merger of VWR and Avantor, portfolio companies of 2 important private equity clients in the health care industry. This transaction required significant committed capital in order for our clients to have the conviction to proceed. So we married our Merchant Banking and leveraged finance capabilities to deliver a comprehensive financing plan. We then offered this proprietary investment opportunity to our institutional and family office clients. And then given the impressive leadership at Avantor and their effective integration of these 2 businesses, we successfully took the company public in the largest U.S. health care IPO ever. In my mind, a very clear example of our differentiated sourcing, investing and partnering capabilities across our platform. Now our $320 billion in assets makes us one of the largest alternatives investors in the world. And as David said, we are embarking on a plan to grow our third-party assets by $100 billion over the next 5 years. We've made substantial progress over the last year in getting ourselves organized to execute this plan. We've unified 5 different investing platforms across the firm into one operating division, establishing clear leadership and broad-based teams across all the alternatives asset classes, while creating a centralized alternative capital markets and strategy effort to drive our fundraising plans forward. Now this plan clearly scales our business further. And importantly, we will migrate the more capital-intensive investments we make, such as private equity and growth equity into fund form, while remixing our balance sheet assets, resulting in a $4 billion capital reduction across our investing businesses over the next 5 years. And we are also investing for growth across our consumer and wealth platforms, with a focus on better serving our individual clients. We launched our consumer bank over 3 years ago, with loans and deposits as our initial offering. But we have a broader ambition here, to build the digital bank of the future. And similar to transaction banking, this represents another large and highly fragmented market where capturing even a small share can build a substantial new business for Goldman Sachs. You'll hear from Eric Lane later, who is responsible for these businesses, about how we've made considerable progress in building a multiproduct digital storefront. Last year, as David mentioned, we had the very successful launch of our Apple Card, our first-ever credit card. And we continue to grow our existing market savings and lending products, further building out this platform. Three years in, we've seen dramatic growth across clients, deposits, loan balances and revenues. And we are executing on what we see here as our mission, to provide tools that enable our clients to better control their financial lives. And the fourth major priority, expanding our reach across the wealth spectrum. We are building an integrated wealth management platform from ultra-high net worth, all the way through to mass affluent. Our primary focus at the moment is to scale in the high net worth segment of this market. It's an $18 trillion market where Goldman Sachs has less than a 1% share. We're executing on this opportunity through 2 primary businesses: our existing Ayco platform, which is a leading C-suite counseling business and United Capital, a national RIA platform we acquired last year. We will utilize our deep corporate relationships to build an integrated offering from the C-suite through to a broader base of employees. Again, capitalizing on our banking franchise as well as the synergies between Ayco and United Capital. Ayco now serves employees at over 400 corporations in the United States. And we've developed a clear plan to deepen our penetration, with an expectation to establish 30 new programs, covering 300,000 employees annually. Again, leveraging our corporate channel to methodically increase our share in this very attractive high net worth market. And we have a long history of meeting our clients' needs anywhere and everywhere, with a culture and global connectivity across our firm that enables us to deliver our services in a completely seamless and integrated fashion to our clients all over the world. We believe this differentiates us from our competitors. You'll hear from Richard Gnodde, who's responsible for our international businesses, about how we are investing behind our global presence, extending our leadership internationally. I want to spend a minute on our strategy for China. Goldman Sachs has operated very successfully as the leading financier and investor in China over the last 25 years, ensuring we continue to be the leading foreign firm operating in China is strategically important for the long term. As we see the Chinese government increasingly taking actions that appear to be accelerating the opening up of markets, we will be patient and deliberate here, of course, but the scope of this opportunity remains very attractive for Goldman Sachs. To achieve our goals, we are applying for 100% ownership of our business in China, which is a key part of our 5-year plan. This will enable us to better manage our operations onshore, while investing for growth across every part of our business, with a particular focus on building asset management and private wealth platforms over time as this landscape continues to evolve. But we are confident in our ability to execute upon our growth plan, based on our strong track record building businesses organically over time. Let's take our debt underwriting and Asset Management businesses as 2 great examples where we made deliberate decisions to build businesses for the long term, with franchises that are now key leaders in their respective markets. In each case, we took a patient, methodical, long-term approach ultimately taking share in highly competitive markets and building businesses that are core to the firm today. Our intention is to do this again across each of the 4 major growth priorities that I outlined. Now I want to draw your attention to the third component of our strategy: driving operating efficiency across the firm. We will execute on $1.3 billion in cost savings over the next 3 years. And importantly, these savings will be reinvested into our growth priorities. And over the last 15 months, we conducted a very thorough underwriting of our firm. And our initial focus here was to assess our organizational structure, with a clear desire to break down barriers and consolidate certain businesses, bringing more clarity and accountability into our operating model. We've better aligned our operating infrastructure, including moving 7,500 people from engineering and operations into the businesses they support. And we're working to simplify our pyramid structure, which will enable us to reduce the layers across our organization. Now together, these steps will allow us to better manage our resources and improve our overall client experience. Second, we identified areas to invest in automation and infrastructure, including investment in all the technologies you would expect from a world-class engineering organization, such as artificial intelligence, robotics and many others. And our priority here is to build scale, while enhancing the client experience, increasing our resilience, while reducing our operational risk. And third, we further refined our real estate strategy, developing a clear plan to identify the best cities to colocate our people to drive a more integrated approach. This strategy reflects our campus consolidation efforts including our 2 new state of the art facilities in London and Bengaluru, as well as our expanding use of strategic locations around the world. 33% of our employees are currently working in one of those key strategic locations, including Bengaluru, Salt Lake City, Dallas and Warsaw. Our goal is to increase this percentage and get closer to 40% over a reasonable period of time. And our investment in these strategic locations enables us to build centers of excellence around specific capabilities that support our business initiatives, AI, cloud and data analytics as 3 great examples. Now to support our overall operating efficiency efforts, we're creating an integrated expense architecture, focused on financial planning and analysis as well as enterprise resource planning. And taken together, these ongoing efforts will drive sustained efficiency, improved accountability, more resiliency and better operational discipline across the firm, while creating capacity for us to reinvest in our growth and better serve our clients. Now I mentioned One Goldman Sachs at the outset, which is foundational to our operating approach. As someone who grew up in the business covering clients, I am passionate about this philosophy. Client centricity drives everything we do, from organizational decisions, such as embedding our transaction banking platform between Investment Banking and Global Markets to the talent deployment strategies I referenced earlier. To prove we could deliver One Goldman Sachs, we launched a client coverage program, establishing a core group of 31 firm-wide clients, representing about $2 billion in revenues. These clients have a multidimensional relationship with us across our divisions globally. We believe that if we can cover these firms with a more unified strategy and deliver the full throw-weight of Goldman Sachs that we can improve the overall quality and depth of these relationships. So we carefully selected cross-divisional coverage teams and created a very clear incentive program, focused on relationship progress, not on revenues. This pilot was very successful, and we received extremely positive feedback from these clients. We also learned valuable lessons that we could break down divisional silos and motivate better collaboration across the firm. We now have a foundation to build on as we move to the next phase of executing One Goldman Sachs. And so we've asked 2 of our next-generation leaders: Matt Gibson from our Investment Banking business; and Sam Morgan from our Global Markets business to move One Goldman Sachs forward. Their plan includes expanding this program to 100 clients over the course of 2020 and further institutionalizing our more holistic approach to covering clients across the firm. They're also going to be focused on curating the wealth of content created inside of our firm to ensure our continued thought leadership in the world, while working closely with our engineering team to deliver a better digital experience for all of our clients. So 1 year in, we are extremely pleased with the progress we're making. And you'll hear a lot more over the course of the day about all the ways we are driving client centricity. In my mind we are on a journey with a clear opportunity to improve along the way in advancing our One Goldman Sachs philosophy throughout our firm. Now I want to spend some time on our engineering capabilities. Ensuring that Goldman Sachs remains a world-class engineering organization with a clear willingness to disrupt is critical for our long-term success. So we are investing heavily to bolster our already formidable engineering infrastructure. Last spring at the Bernstein conference, I shared our engineering budget of $4 billion for the first time. In 2019 that $4 billion was split, 53% running the bank and 47% investing for growth. Today, I'm pleased to provide an update that our 2020 budget will be up nearly 10% to $4.3 billion. And we are excited about the fact that we will deploy over $2 billion this year, investing in our growth priorities. We will, of course, demand discipline here, the same as we do in our operating units, and Stephen will take you through later our investment framework which is an important foundation of how we manage the spend intelligently to drive long-term returns. Investing in this engineering talent is a crucial component of our overall people strategy. Engineers now comprise nearly 25% of our workforce. And we've got leading engineering capabilities, offering an unmatched quality of experience with substantial homegrown talent and strong retention statistics. Our engineers like working at Goldman Sachs. We're accelerating our ability to attract top people externally. David referenced our new Co-CIO, Marco Argenti. We also hired a new CTO, Atte Lahtiranta, from Verizon. Both examples of going outside the firm to source best-in-class talent. Marco and Atte are bringing us fresh perspective while partnering with our own long-time technology thought-leader, George Lee, in driving our engineering plans forward. We are cultivating here an environment where our engineers can work side-by-side with leading finance professionals, working from the client backwards, building platforms and creating solutions that make us even more valuable for our clients over the long term. And finally, a key component of our talent strategy lies in our incentive structure. Pay for performance has always been core to Goldman Sachs' incentive philosophy. We are operationalizing this philosophy, ensuring that all of our people are compensated to drive accountability and encourage One Goldman Sachs behavior. We're implementing enhanced incentive structures across the firm in order to drive this approach. For our management committee, we now have a framework with specific metrics-based parameters as well as more performance-based equity, holding our most senior leaders accountable for driving long-term performance. And for our broader partnership, we're balancing tangible financial outcomes with long-term client focus, risk management, talent development as well as diversity. We will continue to refine our approach but it will always have a pay-for-performance mentality and full alignment with creating long-term shareholder value at the core. Now as I said at the start, my role as the President and Chief Operating Officer gives me a unique opportunity to work with our key leaders to drive excellence and discipline in executing our growth strategy. [ We are playing office ]. As a management team, we are laser-focused on the key metric to measure our progress and offer better transparency, both internally as well as externally. We have a unique opportunity in front of us, and we intend to maximize it. I now want to turn it over to Stephen, who's been my partner for 20 years, to walk you through the financial road map that will result from the execution of our strategy. Thank you very much.

Good morning. I am Stephen Scherr, the Chief Financial Officer of Goldman Sachs and in my 27th year here at the firm, having served in a variety of capacities across a number of different divisions. I'm very pleased to be with you all this morning. For the next 30 minutes, I will focus on the financial strategy of the firm with an emphasis on the financial targets that David introduced and the drivers of forward profitability to be addressed throughout the day by each of our businesses. My presentation centers on 4 key elements of the firm's financial strategies. I will start with the growth potential of our businesses, both new and incumbent. Second, I will address our plan for funding optimization and our ability to render the firm more competitive through a lower cost of funds. Third, I will provide context for our 3-year $1.3 billion expense initiative. And fourth, I will review our approach to capital management and its impact on shareholder return. While this is the firm's first Investor Day, our presentations today are a continuation of our work over the past year to outline the firm's strategic direction and to enhance transparency. Our efforts have included a new format for our earnings presentations, broader engagement with both equity and fixed income investors and new segment reporting. This Investor Day further reflects our ongoing commitment to providing the market with a clear articulation of our efforts and objectives. With that, let me begin. As a management team, we are committed to driving shareholder value. Our medium-term targets are both an indication of our ambition and benchmarks against which we will be measured. In the medium term, we are guiding the firm to an ROE of greater than 13% on more consistent and durable revenues. An ROTE of greater than 14%, an efficiency ratio of approximately 60% and a CET1 ratio at the lower end of a range of 13% to 13.5%. To be clear, by medium term, we mean 3 years. Our plans assume a normalized environment, like our peers, we do not try to forecast dramatic shifts in the macroeconomic backdrop, but we are always ready to pivot if things should change. The path to achieving these targets will not be linear. Top line growth may vary, new initiatives may take longer. Funding efficiencies and expense savings, however, are more predictable and more within our control. Our analysis focuses on the medium term, however, over the longer term, 5 years or more, we expect to be achieving mid-teens returns or higher. This will come as investments in new businesses and technologies, such as Marcus, Apple Card and transaction banking mature over a longer time horizon. As new businesses and platforms hit their stride, they will not only be revenue accretive but will contribute to a more stable fee-based revenue base on a more static expense base. Before moving on, I want to address the $5 billion revenue target we offered to the market about 2 years ago. We continue to progress toward that target. And we are not withdrawing from the underlying commitment to those initiatives, but they are not the limit of our ambition. And today, we are folding that target into our broader strategy. As David referenced, we are more focused on bottom line returns. In the future, we will speak to these measurable targets that embrace shareholder return as a marker of success, not revenue alone. The path to a 13% or higher ROE in the medium term is rooted in 3 key components: revenue, expenses and capital. I will review each using this slide as a bridge to our target ROE in 3 years. We start with our reported ROE of 10% for 2019. Given the impact of elevated litigation expense and a lower tax rate in 2019, we begin with an adjustment of 75 basis points based on forward expectations. Next, business activity across the firm, reflected in the second bar, will contribute 50 basis points of ROE lift. This number includes revenue expansion but is burdened by investment spend, and importantly, reserve build, most notably in our consumer business, where the impact is most acute in this 3-year window. Separately, across the third and fourth bars, over [ 200 -- 300 ] basis points of ROE improvement will be the product of funding optimization and expense initiatives. We will reduce interest expense by about $1 billion as we lower our cost of funding, lifting ROE by 75 basis points. This will be reflected in our financials as revenues. Lastly, run rate expense efficiencies. Savings of $1.3 billion will generate 125 basis points of ROE improvement, offsetting much of our near-term investment spend. Importantly, capital efficiency will benefit returns as we grow balance sheet. We will optimize in 2 ways: first, we are redoubling efforts to allocate capital on the basis of risk-adjusted return, given the velocity turn of capital across our business, we have continuous opportunities to redeploy; second, and perhaps more importantly, we are shifting our balance sheet mix, best exemplified in our alternatives business to operate with lower capital density. To be clear, the ROE we are targeting is not just higher than in recent years, but will be more consistent, reflective of our business evolution. Let me tell you more about our growth plans, starting with revenues. Our forward plan contemplates growing and strengthening incumbent businesses and developing new products and services for clients. We anticipate $2 billion to $3 billion of revenue growth over the medium term across our incumbent businesses. This will be driven by expanding our global footprint in Investment Banking, Global Markets and our PWM business, increasing financing activity in Global Markets and growing Asset Management. Another $1 billion to $2 billion of revenue expansion will come from new initiatives, including building our transaction banking platform, growing our third-party alternatives business and scaling our consumer banking, high net worth and mass affluent offerings. Again, performance of these businesses in the medium term does not reflect their full potential, which will be better reflected in the longer-term as revenues pick up and expense growth subsides. Revenue growth of $3 billion to $5 billion will be further supplemented by efforts to operate more efficiently, including deploying technology to more efficiently run the bank, realizing interest expense savings as we grow deposits and optimizing the deployment of capital. Building new businesses and new sources of revenues carries investment. Here, I'm sharing with you investment J-curves for our consumer and transaction banking businesses. First, in orange, we show expected pretax income, excluding the reserve build associated with Marcus and Apple Card. This curve reflects the operating cost of the build and realized losses in the business with 2019, representing the deepest part of this curve. Second, in green is GAAP pretax income, which includes the full impact of the reserve build under CECL. Our reserves against the consumer portfolio have grown from a 0 base and will increase in 2020. This will be driven by growth in the portfolio and will reflect new CECL requirements. Transaction banking, embedded in these curves, has a more muted investment impact, given its immediate benefit to the firm. We've already started to realize efficiencies as the first user of the platform. While plans for both the consumer and transaction banking businesses continue to evolve, we project them to break even within a 3-year time frame. We will, of course, adapt to the extent that new accretive opportunities present themselves. Beyond the medium term, there is potential for strong pretax growth with scale, which will fuel returns on our longer-term path to mid-teens or higher. In that vein, let me spend a moment on our framework to assess investment opportunities. Given our ambitions for growth, we, as a new management team, are taking a disciplined approach to making investment decisions. As an abiding principle, we invest capital where accretive and enhancing of shareholder returns, otherwise, we return it to shareholders. We make decisions about where and how to invest along 6 basic criteria, some of which David summarized. First, we aim to meet client needs and address client pain points. Second, we capitalize on foundational advantages. We look for opportunities in large revenue pools where we have a competitive edge. Third, we look for adjacencies through our incumbent businesses. Fourth, we seek to increase more durable revenues and improve revenue diversification. And finally, we look to enhance our funding profile and improve capital efficiency. On the right of this slide are examples of how we thought about some of our current initiatives. On existing businesses, including the expansion of the investment banking footprint or wealth management, we expect to be accretive within 3 years. On adjacent and new businesses, including transaction banking and consumer banking, we evaluated these opportunities over a longer time horizon. These longer tailed businesses should yield a higher ROI, commensurate with the risk attending to the relevant investment time line. In both cases, we are looking for higher marginal margin opportunities with more durable revenues and lower capital consumption. With that, I'll turn to our funding optimization plans. As many of you know, compared to other banks with large deposit bases, our historical reliance on wholesale funding has left us with a higher cost of funds, rendering us less competitive on this measure. Along with our treasury team, it is my job as CFO, to fund our businesses as efficiently as possible. So our plan includes a multiyear strategy to reduce funding costs, resulting in higher net revenues for the firm. There is considerable value to be unlocked here. The 3 components of our strategy are depicted in the graph on the right side of this slide. Component #1. We are further diversifying our funding mix through deposit growth. Replacing wholesale funding with deposits will lower our funding costs and allow us to diversify into less credit-sensitive funding sources. To this end, in 2019, we refinanced approximately $20 billion of maturing vanilla debt with approximately $5 billion of issuance, relying more significantly on deposit growth. This will continue in 2020. Component #2. We are enhancing our process of asset/liability management. Historically, the weighted average maturity of our debt has been about 8 years. Deposit funding will modestly shorten the overall duration of funding to more closely match the duration of assets. Component #3. We will seek to optimize our liquidity pool. While the math I'm showing you today does not include any benefit from liquidity management, as our business mix evolves, we will have opportunities to modestly extend duration and the composition of our liquidity portfolio to lower costs and create further alignment between assets and liabilities. We believe the first 2 elements alone can generate about $1 billion in revenue uplift over the medium term. Our funding optimization strategy, along with the asset-side initiatives are part of a broader strategy. We are embracing the bank model. There is strategic value behind the regulatory moat and our standing as a bank, both on the asset and liability side of the business. Embrace of the bank model is by no means a rejection of our long-standing dominance in broker-dealer activities, in fact, on the contrary, the more we engage in traditional banking activity the more efficiently we will benefit our incumbent businesses. And we can do this without the costly footprint that burdens our peers. In the chart on the right, you can see that compared to the largest banks in the United States, we have a lower portion of balance sheet and activities in our bank entities. This is changing. We've already taken steps to grow this number. For example, more than 80% of our HFI loans are booked in our bank entities. Consumer lending and card receivables are booked in the bank. Our interest rate derivatives business sits within the bank, and we are actively working with clients to migrate our foreign exchange business. We are taking a measured and prudent approach in scaling bank assets and activities. But again, we believe this will be an important source of future upside for the firm. To spend another moment on deposit growth. Our projected $1 billion in interest expense savings is largely a product of diversification of funding into deposits. We've had consistent organic growth in deposits since the acquisition of the GE deposit platform, which we enhanced and rebranded as Marcus. On this slide, you can see that deposits have grown from 31% to 43% of our unsecured funding mix since 2015, and we expect to reach 50% in the medium term. As we continue to shift our liability stack toward lower-cost deposits, we are lowering the firm's average cost of funds. In the current rate environment, for every $10 billion of wholesale funding that we replace with deposits, we'll be able to save around $80 million in interest expense each year. In targeting $100 billion in deposit growth across channels and enhancing our asset/liability management, we project we can reduce the firm's cost of funds by 30 basis points in the medium term. But this is another area where we believe there will be benefits beyond the medium term as we have greater ambition than 50% deposits in the longer term. As I noted, we are targeting a 60% efficiency ratio in the medium term. As we pursue an ambitious growth plan, we will achieve this by growing revenues faster than expenses and by reducing our run rate cost base. Let me break down the elements of our expected improvement in our efficiency ratio. We start with our reported efficiency ratio of 68% for 2019. First, as described earlier, we will increase revenues through business growth and funding optimization, accounting for 600 and 125 basis points of efficiency ratio reduction, respectively. Second, growth in revenues comes with growth in costs but as we grow higher marginal margin activities, for every dollar of revenue, our expenses will be lower. Third, the increase from expense growth will largely be offset by 350 basis points of ratio improvement resulting from the 3-year expense reduction plan of $1.3 billion discussed earlier. Furthermore, investment spend on new initiatives will burn off in the medium term, as those businesses scale and become accretive to returns. Finally, as I noted on our earnings call, our starting 2019 ratio was burdened by the impact of elevated litigation expense, we thus make an adjustment to reflect our forward assumption for litigation. We hope you will take away that, though we are in an investment mode, we are committed to maintaining expense discipline to create capacity to fund growth. Dynamic expense management is not new to Goldman Sachs. It has consistently been a priority to align expenses with revenue. Our revenue volatility is generally in line with our peers, despite differences in business models. That said, our historical earnings volatility is much lower than peers as we have consistently adjusted expenses, both compensation and noncompensation. Our expense discipline, coupled with our shift to more durable fee-based revenues, should continue to drive low earnings volatility as well as capital return flexibility. With that, let me turn to capital. Goldman Sachs has a history of prudent capital management. Since becoming a public company, we have exhibited outsized book value per share growth relative to our peers. Over most historical time periods, our book value per share growth has outstripped other banks. In the last 5 years, we've returned over $30 billion of capital or more than 90% of net income, notwithstanding considerable investment spend. Our book value has doubled over the past decade. We increased our quarterly dividend by 47% last year. And with a more durable business mix, we will look for opportunities to further increase our dividend over time. Our flexible approach to capital management enables us to adapt to changes in regulatory and macro circumstances. Further, we adhere to the investment philosophy I described earlier. We first look for high-returning opportunities to deploy capital within our businesses to support client activity. Any excess capital not reinvested in accretive opportunities will be returned to shareholders. It is for that reason that we are sharing a CET1 target ratio with you today and not a payout ratio. Make no mistake, we seek to maximize our payout ratio, but subject to meeting capital targets and capturing opportunities to grow the firm in the interest of long-term shareholder return. Staying with capital, our medium-term CET1 ratio target is at the lower end of a range of 13% to 13.5%, which comprises: first, the 4.5% minimum; second, our expectation of a move to a 3% GSIB surcharge category in the medium term; third, a stress capital buffer of 5%, 50 basis points lower than our historical average; and finally, a 50 to 100 basis point management buffer. In executing our strategy, we will grow our balance sheet in the medium term, but our mix of on-balance sheet assets will change over time. We aim to reduce on-balance sheet equity investments in alternatives and lower the stress loss intensity of our assets, which should reduce our medium-term SCB. Growth of more traditional banking activity should further reduce our SCB in the longer term. This reduction in the SCB density of our balance sheet will serve to offset the incremental capital required to move to a higher GSIB surcharge, which will occur as we lean into accretive financing activity to support our clients. Clearly, CCAR is subject to change. We will, of course, adjust as future regulations reveal themselves, and as our business and macroeconomic environments evolve, but we are committed to managing capital as efficiently as possible. Let me give you a little more insight into how we manage capital at the firm. Our attribution of capital is dynamic, accounting for our multiple regulatory constraints and shifting weights as those constraints change. We intentionally allocate capital toward capital-efficient higher growth opportunities, and equally, withdraw capital from businesses that do not demonstrate adequate returns. The right side of this slide shows the attributed equity and returns by segment. We share this for the first time today and intend to share it quarterly. Importantly, it shows that over the last 3 years, we have been active managers of capital, reducing it in Global Markets, which is down 10% and allocating to other segments or returning it outright to shareholders. On the forward, we will do the same. Capital attribution is not fixed, it will remain dynamic, as we operate more efficiently in one business, we will seek to redeploy or return it. A couple of things worth highlighting on this slide. First, unlike peers, and even in our new segments, we do not operate with a corporate center. All capital is fully allocated. We think this is a better way to manage the business, both for internal and external stakeholders. Second, as a general matter, we expect our businesses to earn in excess of their cost of capital. I would point out that as you review this slide, that returns from the consumer and wealth management segment reflect the impact of investments in our new consumer business. This segment would otherwise reflect approximately 17% ROE and 21% ROTE in 2019. Additionally, let me spend a moment on our Global Markets business, where the 7% return is undoubtedly in focus. Later this morning, our Global Markets leadership will provide you with their planned path to a higher ROE. As our largest segment, Global Markets will benefit most from our expense savings initiatives. Along with revenue growth and reduced cost of funding, we believe this segment can achieve a 10% ROE in the medium term. We realize it is difficult to measure our Global Market segment relative to peers. First, we fully allocate cost and capital, unlike our peer set. And second, we do not combine Global Markets and Investment Banking into a single segment, notwithstanding the synergies that exist between the 2 divisions, especially across our corporate franchise. With that, on the right side of this slide, we created a common basis for comparison. First, we combined our segments as others do. Second, we pushed down capital kept at the corporate center of our peers to these segments on a pro rata basis to their existing capital attribution. With only those 2 comparative adjustments, our returns are in line with the industry. This is despite being burdened by litigation expense, which reduced our 2019 ROE by more than 100 basis points. The takeaway is that we do not view our march to higher returns in Global Markets as starting from a competitive gap as some might assume. We will grow revenue, operate more efficiently, reduce our funding costs and scale our transaction banking business, all of which will provide further lift. The prospect for growth and change at Goldman Sachs is real. As we grow and pursue new opportunities, we give continued and thoughtful consideration to risk. Our deep culture of risk management is entrenched within our values, our people and our culture. Through our best-in-class risk management framework, we apply enhanced oversight and scrutiny to new opportunities in products, markets and client types. Where we are growing into new areas, we are enhancing our risk and control framework accordingly, including the hiring of external talent. We continue to employ a mark-to-market discipline, regardless of accounting treatment, which serves as an early warning system as we actively monitor late-cycle risks. As the CFO, I know that we are managing an evolving risk profile for this organization. The chart on the right here bears this out. Since 2015, our market risk-weighted assets have decreased by 38%, while our credit RWAs have increased by 16% as we've continued to increase lending and financing activities. I'm also mindful of the moment we are in, further into a benign credit cycle. We watch for signals and manage our portfolio accordingly. That said, we are comfortable with the way in which the firm is positioned. We are carefully managing unsecured consumer credit extension. We are focused on client adjacent lending across Investment Banking and Private Wealth Management, with the credit attributes that carries. And our financing activities within Global Markets, for example, prime and repo are secured and appropriately structured. Of course, as we continue to build new scale businesses, we are exposed to new risks across Goldman Sachs. Areas of consumer credit, fraud, anti-money laundering and cyber risks are top of mind, with a view to maintaining operational resiliency and attention to privacy. Accordingly, we have built new tools and hired experienced professionals to augment our talent pool, in line with the long-standing risk culture of the firm, unburdened by legacy. We will manage risk dynamically, especially in new businesses. We are not beholden to lending targets and will adjust as conditions evolve. Our risk talent across the firm is using infrastructure and analytics that provide insight and agility to pivot quickly. And as we innovate and build across markets on the consumer side, Marquee on the institutional side, we remain vigilant to cyber risk facing the firm. Let me close with a few observations. First, delivery of financial targets as we have today is new to the firm, but we are committed to their achievement. Second, we are focused on driving a more diversified revenue base with higher quality earnings. Third, we will continue to manage our expense base to create leverage for growth. Fourth, prudent management of risk will remain core to our efforts. And finally, we expect to be held accountable to these targets. And in fact, our ambition is to exceed them, all with the objective of creating long-term shareholder value. I will now hand it back to Heather to take us into our first break. Thank you all very much.

Great. Thanks, everyone. We are going to take a short break. Please enjoy refreshments outside. They are provided by small business owners who have graduated from our 10,000 Small Business program. We will be back here at 10:00 a.m. sharp for Investment Banking. Thanks so much. [Break]

Good morning. I'm Gregg Lemkau, and along with my Co-Head, Dan Dees, I have the great privilege to lead the Investment Banking division. I've been at the firm almost 28 years. In fact, Dan and I started in the same analyst class together in 1992. And like many of our senior leaders, our careers have taken us many places. Dan worked for years in Hong Kong and Tokyo, and came up in our capital markets business. And I've lived and worked in New York, San Francisco and London and, built my career in our Advisory business. Together, we bring complementary backgrounds and skills along with a shared belief in the culture of teamwork and excellence at Goldman Sachs to lead this great franchise. So let me take you through our business and our strategy. And let me start with a clear statement, Goldman Sachs is the #1 investment bank in the world. And that leadership position is rooted in being trusted adviser of choice. It's what every Goldman banker aspires to be, trusted adviser to their client. And that is at the core of our success. It can be trusted adviser on an M&A deal or on a capital raising. It can be on a company strategy or on a personnel move. It could be on a transaction or not. But capturing the mindshare of the most important decision-makers at companies and investing firms is what we do best. And that is what enables our consistent and long-standing success in Investment Banking. And we defend this position by having world-class people, operating in a culture that's teamwork-oriented and client-centric with a dedication to delivering excellence to those clients and we do this globally. And this leadership position didn't just come together overnight. It's been built step-by-step through decades and decades of investment in our people, in client relationships and in our culture. And notwithstanding this clear leadership position today, there remains significant room to continue to grow this great franchise. And I look forward to taking you through just how we plan to do that. In Investment Banking, we cover over 10,000 clients. We organize ourselves across industry group verticals and across products. And we deliver broad solutions to our clients across strategic advisory, equity and debt underwriting and risk management. Moreover, we leverage these client relationships to source opportunities broadly across the firm and deliver on the strategy of One Goldman Sachs. As you can see, we are the market leader based on volumes across advisory and equity underwriting, and we've made significant gains to establish a top position in debt underwriting. And these market-leading positions have generated market-leading revenues. Goldman Sachs reported greater Investment Banking revenues than any competitor over the past 5 years. But most importantly, being the #1 investment bank is not just an objective, it's a self-reinforcing cycle. In an experience-based business, working on more transactions than anyone else, allows us to provide better advice and solutions to our clients in the future. We have over 3,000 bankers in over 40 offices worldwide. We serve our clients globally. And that core leadership position that we enjoy across M&A and equity underwriting is consistent across regions. But more importantly, the breadth of coverage geographically is invaluable to our clients, many of whom operate globally themselves. In an increasingly connected world, our clients don't want to be limited to their home regions when evaluating strategic options. They want a strategic adviser that can think and operate globally. Perhaps the best example of this is the recent work we did for Fiat Chrysler, culminating in their announced merger with Peugeot last fall. Fiat Chrysler is a company with effectively 3 headquarters, Detroit, London and Turin. Each location has some important executives and key decision-makers. And each of them requiring hands-on attention from senior bankers. So we constructed a team to mirror our clients' needs, with senior bankers in New York and Chicago for the U.S. and London and Milan for the European team. And we worked together seamlessly across geographies, time zones and languages to serve our clients' needs. And when we shifted to execution mode, the breadth of this geographic footprint was even more critical. There was an initial foray with a Japanese counterpart. And our ability to provide advice relied heavily on the strength of our team in Tokyo, providing insights on that counterparty and on those markets. And when the counterparty shifted to a French partner, that same seamless coordination took over with our Paris office, delivering local market insights and expertise. The merger of FCA and Peugeot was the largest cross-border transaction in 2019. Goldman Sachs committed resources across 3 continents and 7 offices to deliver world-class execution and advice to our client in the way that we do best. Similar to our breadth of leadership across regions, we have consistent leadership across industries. We enjoy #1 or #2 position in M&A and equity across every industry sector. And that full spectrum of leadership across sectors is something that makes us more valuable to clients in each sector. Our clients today are facing increasingly complex challenges and opportunities. You see technology disrupting entire industries. We can't advise a retailer without a deep understanding of what's going on in e-commerce. You can't advise an industrial company without knowing what's going on in software and automation. So we leverage our cross-sector expertise to provide insights to those diversified clients, and to clients looking to pursue strategic activity across sectors. It's well beyond what any specialized competitor could hope to do. And in markets like this, differentiated advice is at a premium. Our broad and deep sector expertise is a great example where decades of investment, building our franchise can deliver a competitive advantage for our clients and in turn, for us. This broad leadership across sectors also makes us a significantly more valuable partner for our financial sponsor clients, who know they can turn to Goldman Sachs for expertise across their entire portfolios. This client group has been a key growth area for our franchise over the past decade. Coming out of the financial crisis, we identified private equity as an area of secular growth, and we invested significantly in our coverage of this client base. And that thesis has borne out. The proportion of M&A volume from financial sponsors has almost doubled from 13% in 2009 to 25% in 2019. And that investment we made paid off. Among financial sponsor clients, we ranked #1 in announced and completed M&A, in equity underwriting and in high-yield bond issuance. And the outlook for growth remains strong. Buyout funds collectively have over $1 trillion of dry powder to invest. We cover more than 600 sponsor clients who control 6,700 portfolio companies worth over $2 trillion. This is a massive opportunity. And importantly, this client base provides a core level of consistent activity that helps insulate against cyclicality in our business. If you think about the nature of private equity ownership in the holding period, those 6,700 portfolio companies are likely to see a sale, an IPO or a recap in any given 5-year window. That's 6,700 discrete opportunities to help clients execute transactions to achieve their objectives, and it provides a steady and recurring stream of revenue opportunities to grow our franchise. Let's take the example of the Nordic distribution company, Ahlsell. Over the past 15 years, we advised our merchant bank in acquiring the company. We recapped it twice. We sold it to another sponsor and financed that deal. We took it public. We led 2 equity sell downs, and then we advised and financed on another [ take private ]. That's just one example where a strong relationship with the company and the recurring nature of the sponsor business model provides repeated opportunities for us to deliver multiple solutions to a single client and drive significant revenues to Goldman Sachs. Okay. Let's talk about people and culture. And let me be clear, we have the best Investment Banking franchise because we have the best people. And those people operate in a teamwork-oriented environment with a culture of excellence. And it's not surprising to hear that we think that, but it's reaffirming to know that our clients think so too. We get consistent feedback from our clients that the quality and talent of our people is unmatched. And as I've said, this is an experience-based business and Investment Banking has an apprenticeship-based culture. And those 2 factors together are why our leadership position endures. Our senior team has been together in place for a long time. They've worked on nearly all of the major deals of the past 2 decades. And that's who our junior bankers are learning from as they develop their own skills and expertise and experience. And to build this junior banker pool, we attract the best and the brightest set of undergrad and grad school. That same analyst program that Dan and I worked together in, in 1992 endures today. And it's a heck of a lot harder to get hired today than it was then. We had over 28,000 applications for less than 500 positions. We attract the best of the best, and we're acutely focused on building a diverse workforce to drive diverse ideas and serve our diverse mix of clients. Our incoming analyst class and investment banking in 2019 was over 50% female, and we will continue to look to build a team of diverse backgrounds and insights to serve our clients' needs. We also recognize that there are exceptional people at other firms that we think could strengthen our business and reinforce our culture. And we have a track record of successfully bringing that talent into the firm. David Solomon joined Goldman in 1999 in exactly that way. And when I took on this role in 2017, we looked across our coverage universe, and we found a few holes. So we went out and identified senior bankers and competitor -- the top senior bankers and competitors to fill those gaps. And we hired 7 lateral partners into Investment Banking. People like Chris Gallea in Industrials, Kurt Simon in TMT, Ben Frost in Consumer, David Hammond in Metals and Mining. We brought in Cai Wei to help lead our China business. And we brought Dina Powell back to the firm into Investment Banking to drive our sovereign wealth fund coverage. And those collection of moves supercharged our team, further fortified our franchise and are able to drive us forward. As I noted at the beginning, our position as the world's leading investment bank has built our status as trusted adviser of choice. And nowhere is this more relevant than in our financial advisory business. M&A can be a once in a lifetime opportunity or a career-defining moment for a client. It could be the sale of a long-held family business, it could be a company-redefining acquisition. It can be an industry-redefining merger. And for that, clients want the best on their side. And our role as the leading strategic adviser is undisputed. We finished #1 in the M&A league tables for 19 of the past 20 years. And our M&A market share increased in 2019, growing to 35% of announced volume as we advise on an incredible 20 of the largest 25 transactions. That's 80% share. And we hear a lot about the emergence of boutiques. But if you took all the boutiques together, in aggregate, every one of them, they advised on the same number of top 25 deals as Goldman Sachs. So yes, we're the perennial leader in M&A by volume, but it's actually an imperfect measure of market share. As you know, any deal could have 3, 4, 5 advisers on both sides. But invariably, there's 1 lead adviser, there's 1 banker in that role of trusted adviser, and there's 1 firm earning the preponderance of fees. So when we look at market share in this business, we focus on actual advisory revenues. Who are clients paying most for their M&A advice? And that's overwhelmingly Goldman Sachs. Over the past 10 years, we have a 39% premium in advisory revenues to the next highest bank. We earned more than $7 billion more than the next highest bank. We earned more than #4 and #5 combined. There is no clearer demonstration than this as to who clients view as the most valuable strategic adviser. As with Financial Advisory, we have the world's leading equity underwriting franchise. We finished #1 in equity league table volumes in 2019 and for 8 of the past 10 years. We're the only firm to finish #1 or #2 in each of the Americas, EMEA and Asia for the past 5 years and for the past 10 years. And this leadership position is enabled by being consistently at the forefront of innovation, finding new solutions to serve clients' equity capital raising needs, accelerated share repurchase, overnight converts, pre-IPO capital raises. All of these are innovations that we led to help our clients raise capital. Perhaps most importantly in equity underwriting, we're leading -- we're a leader in taking companies public, helping clients attract capital to grow their businesses and developing client relationships for us that are durable throughout the life cycle. The IPO business dates back to the early days of Goldman Sachs. Henry Goldman led the firm's first IPO in 1906 for United Cigar. In 1956, we led the IPO of Ford Motor Company, at the time, the largest-ever IPO in the United States. And our partner, Eric Dobkin, created the modern IPO in the 1980s that revolutionized the role of investment bank as intermediary in this capital raising process. And that spirit of innovation continues today as demonstrated by our leadership role on the direct listings for Spotify and [ Slack ]. We'll continue to be at the forefront of creativity for delivering optimal solutions for our clients, raising equity capital. And our latest innovation in this business is around diversity and governance. As you heard us announce last week, beginning July 1, we will only underwrite IPOs in the U.S. and Europe, if there's at least 1 diverse Board member. And in 2021, that will increase the 2 diverse Board members. We believe strongly in the business case for diversity. The data proves it, and we're proud to be leaders and innovators in this area. As you heard from John, the growth of our debt underwriting business over the past 10 years has been a great success story, and it's a great example of our ability to deliver on an initiative. In 2011, we undertook a concerted effort to grow this business. It's a business where we had been #5 or 6 at best. And we'd been as low as #10 or 11. And as you're aware, lending is a key component to driving share and debt underwriting. And while we increased our lending since 2011, our relationship lending book remains less than 1/4 of the size of the big U.S. money center banks. Each of them lending hundreds of billions of dollars more than we do in relationship loans. But notwithstanding our smaller lending footprint, we believe that our lagging market position was just not acceptable. And so the first step was driving awareness and accountability in market share. And with that focus, we all began to sweat missed deals and debt the same way we do in M&A and equity. And it sounds basic, but it was pretty novel for us. And you know what? It worked. Our market share increased. But the step-function change was taking our biggest strength, our Financial Advisory business, and using that to drive our debt business. We thoughtfully built out an acquisition finance platform, attaching lending capabilities to our M&A advice, to provide clients with a complete solution to achieve their objectives. And that allowed us to earn economics on bridge financings and get preferred positions on the takeout financings. And our leadership on large M&A propelled this debt business to a completely different level. Today, we're the leader in capital commitments and sole led deals in investment-grade acquisition finance in the U.S. We've committed nearly $200 billion in 38 transactions since 2015, and we've made 9 acquisition financing commitments greater than $9 billion in that period. So through a combination of these efforts, a focus on market share and building out an acquisition finance platform, we now have a leading debt underwriting business. And this is the ultimate punch-above-our-weight business. We know we have a smaller capital base, but we're happy to overcome that with greater expertise and creativity to be a leader. As you just heard, corporate lending is a key element of our banking franchise. It enhances relationships with clients and it provides attractive returns. And there are 3 components to our lending business. First, relationship loans. These are to our largest corporate clients. It's a very balanced book, diversified across industries, predominantly unfunded and predominantly investment-grade. Second is the deal book, which I just highlighted. These are event-driven bridge loans that enable our clients' M&A and position us well for subsequent financings. And then third is specialty lending. These are direct loans to smaller clients that aren't quite ready to access the public markets. It's an attractive business with strong returns, and it's a great feeder of potential clients for our broader banking services. Each of these businesses helps either build new client relationships, deepen existing relationships or enable clients' transactions, all while generating attractive returns for Goldman Sachs. Okay. Now where do we go from here? Notwithstanding these leading positions we enjoy, we're excited about the growth opportunity that exists for Investment Banking. And we have a strategy to grow across 3 key vectors: increasing our market share on our core clients and services; expanding our client footprint and driving revenue across this broader base; and providing new solutions to our clients, in particular, Transaction Banking. Furthermore, Investment Banking will continue to drive significant opportunities for the firm more broadly on the strengths of our relationships and our franchise. The first opportunity is in our core business. It's relentlessly driving market share and fee share. And from the outside, it would seem that we're in a mature industry with leading market share and limited opportunity for growth. Mature, yes; leading share, most definitely. But we absolutely have opportunity to grow. In fact, over the past decade, we've increased our share of the fee wallet from 6% to 8%. And today, each incremental share point is worth about $750 million. So when we think about market share, we look across 3 measures. We look at dollar volume league table, which is the highest profile; we look at deal count share, who's doing more deals than anyone else? And we look at wallet share, who's garnering the greatest portion of the fees? And while these 3 are often correlated, if we continue to drive for leadership across each metric, across each product, we will drive our overall market share growth. I often get asked, "How can we improve on our position as #1? Doesn't that just mean you've got nowhere to go but down? " And the answer is no, we actually have room to just win by more, as we proved with our M&A business in 2019. So let's look at our M&A business. We have the #1 market share overall and in every region and in nearly every industry. And as you break that down further, you start to see room for improvement. It's mostly #1s, but there's places where we're #2 and can do better. But let's go further. Let's look at TMT. This is the biggest fee pool and is one of our strongest franchises. We're #1 globally and in every region. And yet, even that business has further upside because when you break it into T, M and T, all of a sudden, we aren't #1 everywhere. And now let's look at our Americas technology business. This is a storied franchise. It's the absolute envy of Wall Street. It's the ultimate crown jewel business. When you break that business down further into subsegments, there are actually large fee pools, we're #2 or 3 or 4. And so by drilling into market share at the subsegment level and demanding accountability at each level, we actually find opportunities for growth. Take the example of education technology. It's a place where we have consistently underperformed. And so we went out and found the best banker out there, Adam Nordin, and we brought him in laterally as a partner, and now we're well on our way to #1. Or look at semiconductors, where we have a phenomenal team, but we just finished #2. And it's a sector that generates hundreds of millions of dollars of fees for The Street each year. Each market share point here is material. As we look at our business, we can further increase our leadership position by better targeting clients and opportunities, by redirecting internal talent and resources against these big opportunities, and by sourcing external talent through lateral hiring. As you can tell, we focus relentlessly on market share, and we aren't satisfied until we're #1 everywhere. And even then, we will strive to just win by more. Our second opportunity for growth is through expanding our client footprint. And as we look at our business, our share on companies we cover is strong, regardless of the size of the company. However, as we looked at our coverage footprint, we realized that market cap growth in recent years has created a significant number of companies between $500 million and $2 billion that we don't currently cover. For public companies in the Americas and EMEA, we cover 95% of companies over $10 billion. No surprise. We cover 80% between $2 billion and $10 billion. But for public companies between $500 million and $2 billion, we only cover 44%. And that percentage is even smaller when you add in private companies. And it isn't that these companies don't need Goldman Sachs' services. And it isn't that we don't know how to serve companies of this size. In fact, they make up a significant proportion of our coverage universe today. The issue is we just don't cover enough of them. So we're executing on a plan to hire and train Goldman Sachs quality bankers who could operate and execute in a culturally consistent manner to serve these clients. Two years ago, we added 1,000 clients to our coverage footprint with a real focus on financial-sponsored portfolio companies. Those 1,000 companies generated an incremental $350 million in revenues in 2019 alone. We're now in the process of adding another 1,700 companies, taking our coverage universe well above 11,000. We have set up a dedicated group and a dedicated coverage force focused specifically on this market segment, populating that group with many of our strongest coverage bankers and supplementing it with strong experienced bankers from the outside who know this client base. And the early days have been encouraging. We're excited about our ability to serve these clients and, with that, grow our business. Public companies in this sector generated an average of $8 billion in annual banking fees for The Street over the past 5 years. And that's even bigger when you factor in private companies. We see a significant upside opportunity in executing on this expanded footprint initiative. Our third opportunity for growth in Investment Banking is through offering new client solutions, and our specific strategic priority is building out our transaction banking platform. And of all the growth initiatives firm-wide, this is the one that's most exciting to me. And it's an opportunity we first approached as a customer and a pretty sophisticated user of the existing offerings. And as a customer, we wanted a more modern infrastructure. And as we looked at what was out there, we thought we could do better. So we went out to innovate, and we hired a team and we built a platform. And we went about creating a high-tech, low-touch, client-focused solution, and so far, it's delivering. We're currently using our platform to process many of our own transactions, saving ourselves expense along the way. And we have clients that are beginning to pilot the platform with very positive early feedback. As David said, this is a huge market. And to have a real impact on our business, it doesn't take much in terms of market share. The addressable market in the U.S. is $80 billion, in addition to $5 trillion of corporate deposits. That market is even larger when you factor in EMEA and Asia. And so we -- if we achieve global market share of just 1% who can generate over $1 billion in annual revenues and raise more than $50 billion in deposits, that's 1% market share in a business where many clients use 3 or 4 vendors. It's 1% market share with a client base where we enjoy 8% to 10% market share across most of our core products. And so the incumbents out there with their leading market share can keep their leading market share for now. We're going to start with 1%. And when we get that, it will allow us to diversify our revenues, improve our earnings durability, provide attractive funding to the firm and increase our pretax margins. And finally, transaction banking is quite synergistic with our footprint expansion efforts. That group of companies is likely to be amongst the earliest target groups for this product. And for our bankers showing up to cover these clients, it's sure nice to show up with a great value-added product day 1 for those clients that might not have M&A or financing on the horizon. Let me share a screenshot from the transaction banking dashboard with a view of the client interface. And if we change some words, you might think this was our consumer app, although that would be a pretty wealthy consumer. For those of you familiar with Fintech, you know that it's rare for an enterprise solution to provide a consumer-quality user experience. And for those of you less familiar, let me assure you, this is light years ahead of the industry standard today. But the superiority of our offering runs far beyond a user interface. Because we built it from the ground up, it's unencumbered by legacy technology and it's allowed for a more dynamic and flexible product. It will offer clients real-time insights and analytics to inform their decision making, and it will provide them greater visibility into where payments are in the process. It's far beyond what the legacy providers offer. During this early pilot phase, we're collecting client feedback and continuing to drive enhancements in the product as we prepare for broad-based rollout in the second quarter of this year. And for those of you here in person in New York, I would encourage you to check out the product demonstration in the hallway a bit later. Finally, Investment Banking will continue to drive growth across the firm through our leadership role in delivering on the strategy of One Goldman Sachs. And let me take you through just one example of the long-cycle nature of our client relationships, and the breadth of touch points the firm can have when we enjoy strong corporate relationships. I first met Daniel Ek, the founder of Spotify, in a coffee shop in London in 2010. At the time, the company had less than 500,000 paying subscribers. And even though the prospect of a sale or an IPO seemed years away, it was an exciting emerging company with an exceptional founder. And so we stayed close. As we watched the progress of the business, we took the opportunity to invest our own capital into Spotify in 2012. And then as their agent, we helped them execute capital raises in 2015 and 2016. During one of those, our Asset Management business also invested, creating an opportunity for our investing clients to put capital to work in an exciting company. In 2017, we advised the company when Tencent invested in Spotify and Spotify invested in Tencent Music, creating an attractive strategic partnership for our client and fortifying the story for the public markets. And then in 2018, we were the lead adviser on their landmark direct listing. And that direct listing crystallized significant wealth for many of the senior leaders of the company, which our Private Wealth business was well set up to manage. We now count more than a half dozen current and former Spotify executives as Wealth Management clients. It's a great example of partnering with a client over time, taking a long-term view and being with them every step of the way. It's brought benefits to the firm, to our investing clients and to our shareholders. At the same time, while providing capital and advice to help this amazing company grow to almost $30 billion in value. And there are hundreds of examples like this, each generating more than $100 million in revenue through long-term client relationships built in Investment Banking. From younger firms like Spotify and Uber to industry stalwarts like GE, Disney and J&J. The power of One Goldman Sachs is real. Investing in long-term client relationships and utilizing our position as the front of the house, gives us the unique ability to add value by sourcing investment opportunities, making wealth management introductions and leveraging the full breadth of the firm on behalf of our clients. So to wrap up, let me reiterate the core differentiating factors that make this the greatest investment banking franchise in the world. We have a great brand. We have a relentless focus on high-quality execution. We have a client footprint that is broad and deep and global. But most importantly, we have incredible people who have the opportunity to work together in a teamwork-driven culture and advise the world's leading companies. And all of that is built on this foundation of being trusted adviser of choice to our clients. And we're confident that we can further grow this franchise by continuing to grow share in our core business, by expanding to new clients, by building and offering new solutions to those clients and by continuing to deliver the entire firm. And in executing on this strategy, we will not only grow our revenues and profits, but we'll increase the diversity and resilience of our business. And so let me take you through our objectives. We target being #1 in the Investment Banking fees across advisory, equity and debt underwriting. We will look to maintain and extend our #1 market share in M&A. In equity underwriting, we've been the #1 in volumes, and we aim to solidify that leadership position by achieving #1 rankings in deal count and in revenue. We seek to maintain at least a top 4 position in debt, continuing to punch well above lending weight and drive share well in excess of our relative lending footprint. We will drive further revenue growth by expanding our share with the $500 million to $2 billion companies. And then finally, we will deliver our transaction banking platform to clients, giving them a better product and solution in the process, and in 5 years, driving a $1 billion in annual revenue and $50 billion in deposits. It's an exciting time at Goldman Sachs, and it's an exciting time in invest banking. We have a world-class franchise with world-class people, and we have a real platform to grow. Dan and I are excited about the opportunity ahead, and we're honored to lead this amazing business. I'd now like to welcome my partners, Jim Esposito and Ashok Varadhan to come talk about our Global Markets business. Thank you.

Okay. Good morning. I'm Jim Esposito, and together with Ashok Varadhan and Marc Nachmann, co-run our Global Markets business. I've been at the firm now for 25 years, having started my career in the Fixed Income division. And after a period of time, I moved into investment banking as a part of our Global Financing business, and that's actually a group that Marc and I also co-ran together. So let's jump in. We're navigating a once-in-a-generation period of significant regulatory and technological change that's impacting both our clients and ourselves. Clients now require seamless integration of content, risk analytics, price discovery and execution services. Marc, Ashok and I are incredibly excited to be leading our Global Markets business through this transition. Now today, Ashok and I are going to review the opportunities that result from these changes, our ambition for the business and the action plan that we put in place to meet our objectives. What we're going to describe to you today is not at all a brand new plan. We started to implement, at least parts of this ambitious plan, in early 2018. And to be clear, our plan is not at all reliant on a better or more robust market backdrop. Our plan is not contingent on requiring higher levels of volatility. And for me, that's really a critical consideration. It means we're in control of our own destiny. We're already starting to see some green shoots of progress from this plan that we put in place. On this first slide, we lay out both our ambition and the key drivers of our success. Our ambition is to have the preeminent Global Markets client franchise, with industry-leading returns. We already possess the #2 ranked institutional client franchise, and we've been gaining wallet share now for the past several years. There are arguably only 1 or 2 other banks out there who achieve a similar balance, strength and client relevance across both, FICC and equities. The current operating environment demands scale more than ever before, and in this business, we're already operating at scale. Many of our existing competitors are opting to respond to this environment by retrenching or even exiting certain business lines altogether. It strikes us barriers to entry right now to get into our industry are incredibly high, whereas barriers to exit actually quite low. Our plan strikes the appropriate balance for achieving what is optimal scale for Goldman Sachs, while instilling further resource discipline upon us. Ashok?

Thanks, Jim. Hi, everyone. My name is Ashok Varadhan. I've been at Goldman for 22 years, all of it, in our trading businesses. I've had the privilege of running our Global Markets business for the past 6 years, and I echo Jim's excitement about our future. So to begin, let's dig in on the 2 secular transformational changes that Jim referenced, regulation and technology. On the regulatory side, the amount of financial resources required to run a Global Markets business today has become incredibly prescriptive. As we all know, higher capital requirements for banks has constrained both liquidity and leverage in the system. And technology is driving automation, not just in trading, but in all the markets' workflows. It's led to lower-cost market access for everyone, and it's aiding the seismic shift from active to passive investing. Very few firms can bring to the table our franchise breadth, our financial know-how and combine that with capital adequacy and technological prowess to service their clients. We can grow intermediation share from those less well-capitalized and committed and as clients look to us to warehouse their risk. And as a regulated bank, we can generate more net interest income by financing our clients' wide array of high-quality collateral, which will improve their returns. And we can make client workflows more automated and efficient, which not only lowers the operational cost of trading, but will enhance the overall client experience. Executing on these 3 things is going to lead to higher share and higher returns, and we're already seeing some results, as Jim said. Us, along with 2 other firms, have 47% of the industry wallet, up from 43%, just 2 years ago. And the wallet is going to continue to accrue to scale players like ourselves as clients demand global reach and holistic comprehensive solutions.

Okay. Throughout our history, Goldman Sachs has demonstrated a strong ability to adapt and evolve our business model to meet ever-changing market needs and client conditions. Before we take you through the actual plan, I thought you might find it useful if I were to describe a couple of specific places where we have been refreshing and updating our business model. At Goldman Sachs, we've always had a strong focus on financial discipline. You would expect nothing less from us. But in response to the increased capital requirements that were rolled out in our industry years ago, we implemented a framework that measured returns on a per-trade basis. The result of that was we ended up missing out on certain parts of the business. By attempting to select only the highest returning trades that were available to us, we didn't end up broadening and deepening our client franchise. Now with the benefit of hindsight, we simply pushed our return orientation a bit too far. We've been now adopting much more of a client-centric, longer-term portfolio approach to business selection. This has already put us squarely back in the market flows and it's already led to higher returns. Second change we're making. Historically, we've centered the entirety of our business model around our risk intermediation prowess. Now the client, while it's been shifting much more towards financing opportunities, and financing is a place where we've been underrepresented. Third, we're building greater scale by broadening out the entirety of our electronic execution capabilities, with a goal to serve our clients in whatever channel they want to transact. And then finally, and I think this is an important consideration because it's at a place where Goldman Sachs has enjoyed a competitive advantage over the years, our clients have always desired greater access to all of our market-leading risk analytics, risk infrastructure, our market data. In our division, we manage all of our risks in what we call our SecDB platform. Over the years, clients have always clamored for greater access to SecDB. Now previously, we just didn't allow for that type of access. We've made a very, very big pivot here. We're now eagerly opening up all of these risk tools. We're putting them into our Goldman Sachs Marquee platform. Marquee is available to all of our clients, and you're going to hear a lot more about Marquee today.

So Jim just spoke to you about the importance of us adapting. From where I sit, I'm acutely aware that reported revenues in the Global Markets business has been basically flat for us for the past 5 years, and this is against an industry wallet that's declined by 30% over the last decade. But we have adapted, we haven't stood still. We cut our market risk-weighted assets by 40%, and we've reduced the Global Markets capital footprint by 20%. More recently, we've gotten more vigilant on expense and funding, which I'll get to later. We migrated our business away from long-dated capital-intensive risk intermediation towards more flow business. And as Jim just highlighted, we've been leaning into our franchise in a more expansive way. The results over the last couple of years have been very encouraging. Our revenues have rebounded, such that today, we have a top 3 Global Markets business as evidenced by the revenue table on the right. But the part I want to underscore is that it's higher quality P&L. The revenues are more stable, they consume less capital, risk and expense. And our portfolio exhibits more turnover. I'll give you some examples. 30% of our revenues now come from financing, up from 22%, and secured financing activity tends to be less volatile, more capital friendly and shorter dated. 95% of our cash inventory is off our books in less than a year. Half of our derivative contracts mature in less than a year as well. This enables us to continually assess and redeploy capital into activities that are accretive to returns. But being a steward of resources hasn't wavered our commitment to providing a complete offering of products and services across equities and fixed income globally. This diversification has led to, and will lead to, more stable revenues in the aggregate. And it's the stability of revenues that gives us the capacity to plan. With that, at a high level, let me run you through our 5-point action plan. One, we're going to continue to optimize resources further within the business. This optimization alone will push our tangible returns above 10%. Two, while we've grown our share across our institutional client base, we've identified additional opportunities to close gaps, and we have a detailed and specific plan to pursue it. Three, as Jim said, we've historically done less financing in the markets business than our peers. We've turned up our efforts, and this has been very well received by clients. Four, we're combining our financial acumen and engineering capability to give our most sophisticated clients maximum market access with minimal market impact. Later, I'll give 3 examples of progress. And five, we're aligning the entirety of our clients' front-to-back workflow with the business. Providing our clients a more seamless experience will give us a competitive edge over time. Commitment to this puts us in a position to have the leading Global Markets franchise. Now I'll cover some of the details on resources, and Jim will cover the client initiatives. As John Waldron described in his presentation, driving efficiencies is a firm-wide initiative. Global Markets, as the firm's largest segment, will, therefore, be the largest beneficiary. So let me take you through what we've done and what we're going to do. On the operating expense side, we've already taken out $300 million, with another $700 million in identified savings to come. To put this in perspective, it's about 6% of our total operating expense and will largely come from lowering our own transaction costs, leveraging automation where appropriate and utilizing existing strategic locations. On interest expense, we generated $200 million in savings in 2019 alone, with another $250 million to come over the next 3 years. And on capital and where we've made the most progress, thus far, there's another $2 billion in further efficiencies. However, capital is no longer a reduction story. Capital is a redeployment story. The short-dated nature of a large portion of our capital usage in the business allows us to reinvest in accretive opportunities. All of the discipline that I've described can be achieved with 0 revenue degradation. In fact, it will improve our clients' experience and enhance our ability to compete. So let's get to the ROE slide. In 2019, the return on equity in our [ 4-wall ] markets business was 7%. However, this was burdened by 125 basis points due to litigation reserves. Our ROTE is approximately 50 basis points higher, with the difference relating to our equities business acquisition of Spear Leeds back in 2000. As Stephen highlighted and stressed, we have no corporate center. So every ounce of capital, liquidity and expense the firm holds or incurs gets fully pushed out and allocated to all of the segments. Operating and interest expense savings alone, which we largely control, is going to boost our returns by 150 basis points. And the redeployment of capital that I just spoke about, pursuing the client initiatives that Jim is going to speak about, will add another 100 basis points. The result is we expect to generate ROEs in this business that exceed 10% and ROTEs, which exceed 11%.

Okay. Let's shift gears and talk about all of our various client growth initiatives, and I want to start here with our plan to both, broaden and deepen, our client franchise. As you can see on the left, we already have the #2 ranked institutional client franchise. And again, I'd call out this point that we've achieved a differentiated balance across both FICC and equities. Now with that said, on the right, you can see a $1.2 billion revenue gap that separates us from the top-ranked bank. Now not all of that gap is addressable. Some of it has to do with the size of our emerging market footprint, some of it has to do with funding and balance sheet-intensive businesses. But make no mistake about it, that gap is too large, and we're currently holding our people, not just salespeople, but traders alike accountable to really start to narrow this gap. If I were to describe our business model of the past, what I'd say is, that we used to bring more of a principal mindset to bear. We had built a business that was highly geared towards capital committing, bespoke complex, derivative-oriented transactions. That's who we were. Now we don't want to lose those skills. Those skills have defined our franchise over the years. If a client has something large and complicated they need to transact, we very much want to remain the go-to house for that activity. With that said, we are reorienting the entirety of our franchise to be much more balanced and diversified across both product and client mix. In our division, we're currently tracking over 1,000 unique client gaps that we're looking to close. If we're successful closing these client gaps, it will result in more than $500 million of incremental revenues. There's also a significant opportunity for us to support our clients across a variety of financing alternatives. As you can see on the right, last year at Goldman, 19% of our FICC revenues resulted from financing activities. That compares to a U.S. peer group average of 32%. This financing revenue gap between us and our U.S. peers equates to about $1.4 billion annually. So we are talking about a large gap here. We have a detailed plan that we've been rolling out to increase our FICC financing revenues materially from here. But I should caution, we're going to be incredibly mindful of where we are in the current credit cycle. Most of this increased financing activity will either come in investment-grade equivalent form or be secured by high-quality collateral. Another strategical priority of ours is growing our systematic quant client franchise. Post-crisis, the market experienced much greater growth in the systematic quant wallet than it did in the equity fundamental wallet. Speaking bluntly, we underestimated the opportunity with this client constituency over the years, full stop. The top-ranked bank servicing quant clients made about $1 billion more than we did in revenues just last year. So again, another large gap. We're late, and it begs the question, what are we going to do to start to make inroads with quant clients. We've been building a new tech stack, a new platform. It's going to enhance our clients' execution capabilities across 50 different global markets. When this tech stack build-out is complete, our clients are going to be able to trade with us at a greater than a 99% straight-through processing rate. Despite being late to this opportunity, we are confident we're going to make material inroads in the years to come. And I'll just give you 2 reasons that give rise to our confidence. First, as you heard from Gregg earlier in regards to investment banking's ambition to break into transactional banking, we're building a state-of-the-art tech stack here. We're going to pair that platform up with our world-class equity franchise, and we've seen examples of this in the industry in the past. When you have a leading franchise and you come along with state-of-the-art technology, it provides opportunities to leapfrog incumbent players who are, obviously, relying on their own legacy platforms. Second, many of the large systematic clients are telling us they want to have a deeper relationship with Goldman Sachs. They respect the breadth of our overall equity franchise, and they're telling us they want to have a deeper relationship and have room to diversify their prime brokerage balances to us.

When talking about the secular trend of technology, certainly, electronic trade execution features prominently. I want to highlight 3 examples of how we've benefited from embracing electronic trading by marrying technology with risk management. In corporate bond trading, a market in which 75% of the tickets are executed electronically, it's incredibly fragmented. We've built systematic real-time pricing capabilities for over 32,000 credit CUSIPs. Using these best-in-class analytics, we provide our clients with pretrade transparency and liquidity that gives them the confidence to trade large portfolios of bonds with us at one go. We're regarded as the market innovator in this as we bring to our clients, not just technology and transparency, but what I said before, a willingness to absorb their risk. In commodities, a market in which 80% of the tickets are electronic, we give our clients the same technology we give our own traders, which [ canvasses ] all venues for liquidity. Clients can then decide if they want to trade in the market or if they want to trade with us, based on whatever will get them the best pricing. And then finally, in cash equities, which is essentially all electronically traded, we have the leading position with institutions when providing our own principal liquidity. We traded well over $2 trillion in this capacity in 2019, and in particular, as it relates to passive equity investors, who require 0 execution slippage, we are by far their top provider.

Okay. I wanted to describe the impact that the strategic review process had in our division in terms of improving the overall client experience. I also think this serves as a very good segue into the value that we ascribe to Marquee. We're going to get to Marquee in just a moment. Previously, we had organized ourselves in a way that all of the various trade operations and trade infrastructure actually sat outside of our division, and it required our clients to navigate multiple touch points sitting in different divisions. We decided to change all of that. So early in 2019, we welcomed a large number of operation professionals into our division. And concurrent with that, we created a cross-functional client experience team so that our clients now have a single point of contact throughout the trade life cycle. We've been automating trade workflows. And soon, we will begin to offer API workflow integration through Marquee. Now the ultimate goal here is to provide our own internal efficiency solutions to our clients so they can start to reduce their own costs alongside of us. Goldman Sachs' Marquee is a significant response to the profound effect that technology is having across all of our businesses. Marquee starts to allow our clients the ability to unlock our world-class data, content, risk analytics and execution services. Make no mistake about it, in our industry, digital disruption, it's already upon us. This provides us a once-in-a-generation opportunity to really lead industry change towards a more digital marketplace. Informed and backed by 25 years of our own risk know-how and risk DNA, Marquee empowers our clients to manage their own risk alongside of us, importantly, at the same scale and level of sophistication that we do. Now we thought the best way to really bring the power of Marquee to life today was to show you a quick video demonstration. [Presentation]

I think the video neatly captures why we're so excited by what we're building in Marquee. As you heard from David and John earlier, we've really been reinforcing the importance of delivering the entirety of Goldman Sachs to our clients. The breadth of our firm has always been a competitive advantage. I'd put forward today that there is no other Global Markets business on The Street attached to the world's preeminent investment banking franchise. The renewed focus around the firm on our One Goldman Sachs strategy, combined with what you heard from Gregg on IBD's footprint expansion, I think starts to provide a very nice tailwind in terms of us generating industry-leading returns across both, Investment Banking and Global Markets. Now as you can see on the right of this slide, you can start to see the power of our merger franchise in action. Here, we lay out a real-life case study of a client engaging with us in a large investment-grade acquisition. This deal required bridge financing, permanent capital market takeout financing as well as risk management in the form of derivative hedging. For this specific example, we ended up achieving a 4x multiplier effect to the advisory fees that we earned on the deal. Every single year at Goldman Sachs, there are numerous examples of this multiplier effect at work, and I'd like to think, with our reinforced strategy, there'll be that many more in the future.

So I want to talk a bit about talent. As David discussed, one of our greatest competitive advantages is our people. And starting with the trading side of the business where I grew up, where I work closely with our senior-most risk managers over the course of the last 2.5 decades, I want to be emphatic. I've never felt better about the roster of trading leaders we have across our various product lines. We've had senior-level trading departures, but it's been healthy. It's unleashed the next generation of experienced talent that's better equipped for the business today. Not only do they have trading prowess, but they know the regulations, they have client connectivity and they interact with technology more than ever before. In sales, our people are often cited by clients by being uniquely insightful, content-rich and deeply connected to the organizations they cover. And the culture of embedding engineers in our business drives the innovation that we've shown you here today. Now on diversity. We're making progress. Specifically, we've almost achieved one of our goals of having women be 50% of our campus hires, up from just 1/3 2 years ago. However, that is just a data point. Again, I want to underscore that Marc, Jim and I are unbelievably committed to having the most diverse team on The Street. Finally, the hallmark of having the best people is evidenced by the ability to attract and retain talent, consistent with the other businesses at the firm, of offers we extend to our incoming analyst class, 93% of them accept. And amongst those that join the firm, we retain 90% of our top performers. I'm very proud to say that the best people want to work in our Global Markets business.

Okay. In summary, we control our own destiny. Our medium-term plan alone takes our Global Markets business to above an 11% ROTE. You heard no mention in our plan of requiring a better or more robust market backdrop. About 2/3 of the return growth that Ashok outlined today simply comes from instilling further resource discipline upon us. So all of that falls firmly in our control. We've already demonstrated we can make tangible and real progress in this area. Our people are enthusiastically pursuing all the client growth initiatives that I highlighted today, and importantly, they're united around a common set of goals and objectives. We have our salespeople, traders and engineers, all marching in the same direction around this plan. From here, it's simply up to us to execute. Thank you. We'll now pass the stage to Tim and Julian to review our Asset Management business.

Good morning. I'm very happy to be here today to discuss our Asset Management business, together with my partner, Tim. Tim will start by giving some context on the solutions we bring our clients today. And then, I'll walk through how we're executing our forward strategy. Before we start, I'd like to give a little of my personal background. During my 21 years at Goldman Sachs, I've had the privilege of working in 4 divisions, 2 regions and 3 offices. I joined the firm as an analyst in '98 in the Finance division. I then moved to the high yield desk in the Securities division and high yield capital markets and Investment Banking. I then joined the European Special Situations Group in 2003 and went on to become the Global Head of the Special Situations Group in 2013. And then finally, last year, as we consolidated our alternative investing teams across the firm, I became a global co-head of our alternatives business. I'm now going to pass it over to Tim. A quick fun fact with Tim, we actually attended the same New MD training program in 2005, only in his case, he was teaching it.

Well, thank you, Julian. Thank you very much, and good morning, everyone, and thanks, again, for being here. I want to start by saying I've had the great privilege to work at this great firm for 35 years now, and I'm often asked how I was able to accomplish that. And I remind people that a career at Goldman Sachs progresses through the same 4 stages as a career in Hollywood. And it works like this. Stage one, who's Tim O'Neill? Stage two, get me Tim O'Neill. Stage three, get me a younger, cheaper Tim O'Neill. Stage four, who's Tim O'Neill? And so I can say to you today, I'm very honored, after all these years, to still be here, still wearing a tie. But I'm very excited to talk to you today about our Asset Management business. So let's start here. Our Asset Management business has 4 distinct competitive advantages. First, we are a global player at scale across all asset classes. We manage cash, we manage fixed income, we manage equities, we manage alternatives. And we do all of that all over the world. That's a significant difference from the monoline model of most asset managers, who don't manage cash, who manage principally or only fixed income, principally or only equities, only alternatives and only in the United States. We are a multiline asset manager, with global, broad and deep capabilities across all asset classes. A big advantage. Second, we sit inside Goldman Sachs, and we benefit from the affiliation with a leading Investment Bank that you heard Gregg describe. We benefit from affiliation with a world-class Global Markets business that Ashok and Jim just profiled. And we benefit from affiliation with a preeminent Wealth Management business that Eric will talk about after Julian and I finish. Many of our competitors like to emphasize their stand-alone independence from any form of bank ownership. In contrast, we believe, being affiliated with Goldman Sachs is another strong advantage. Third, we've been doing this a long time. Over 30 years, we've developed teams of experienced investment professionals all over the world who have generated very strong track records, a third advantage. Fourth, we're supported by the large, stable balance sheet of Goldman Sachs, which allows us flexibility to seed new strategies and coinvest with our clients, demonstrating our alignment with them. 4 big advantages. Here are the dimensions of our Asset Management business. Currently, there are $2.3 trillion on the platform. This slide breaks down that $2.3 trillion into 5 buckets. I'm going to start on the left, with liquidity strategies. When we started the Asset Management business in 1989, we had one offering. It was a money market fund. It had $10 billion in it. Over the last 30 years, we've grown our liquidity strategies, which incidentally still include that original money market fund, the anchor tenant of our platform, to $460 billion. And we've added every other asset class. We now manage $790 billion of fixed-income assets. We manage $420 billion for equities. We manage $320 billion for alternatives, and we have $280 billion of client brokerage assets on the platform. Now in terms of scale or size or league table, liquidity, fixed income and alternatives are top 4, and equities are top 10. These are very big markets. So from where we sit right now on those league tables, to the top, is over another $2 trillion. We have lots of room to grow this business, importantly, because we are a multiline manager, we are well positioned to capture flows across all asset classes as clients structure or reposition their portfolios. Here's 2 looks from the perspective of channel segment for the business. Pie chart left, we take the $2.3 trillion and we split it between fee-paying assets of $1.9 trillion and nonfee-paying assets of $410 billion, the bulk of which is the $280 billion of client brokerage assets that I just described. Pie chart middle shows where the fee-paying assets of $1.9 trillion come from. Institutions have given us $680 billion, third-party platforms have given us $610 billion and individuals have given us $560 billion. The AUS from institutions and third-party platforms, which totals $1.3 trillion, is reported in the Asset Management segment. Pie chart right, the $560 billion from individuals is reported in the Wealth Management segment. Now beyond that always thrilling always interesting discussion of financial statement geography, the business point I want to emphasize with you is we have the complete client model. We engage directly with individuals across the entire wealth spectrum through our adviser-led digitally enhanced wealth management strategy that Eric's going to talk about. We engage directly with institutions all across the world, such as sovereign wealth funds, public and private pension funds, endowments, foundations, insurance companies and corporations. These are all-natural constituents of Goldman Sachs. And we offer our products and strategies to clients on third-party platforms, such as banks, brokerage houses like Merrill Lynch and Morgan Stanley, and independent registered investment advisers. We have the complete client model. As I've said, we've been doing this a long time. There's no such thing as an overnight success in the Asset Management business. We built our franchise over the last 30-plus years, and it's very hard to replicate. This slide lists the current 31 different investment strategies that we have on the platform. It ranges from core strategies in fixed income and equities to more specialized strategies. Now as I'm sure all of you know, our client portfolios are not static and neither are we. We continue to evolve with them and we continue to innovate for them. Importantly, we moved the business from being product-centric to client-centric so we can serve them holistically. And our platform, with these 31 different strategies, is designed to reflect their total portfolio needs and offer them a full menu of opportunities. Our investment teams are global and experienced. We have over 1,200 investment professionals around the world with decades of experience. That broad geographic coverage and the regional connectivity helps drive investment performance. Again, as I'm sure all of you appreciate, the best investment firms distinguishes themselves with the continuity of senior leadership. In that regard, our Asset Management business currently has 81 Goldman Sachs' partners in it, with an average tenure of 19 years. Now in the interest of full disclosure, if you exclude me, the average drops to 3 years. But make no doubt about it, being inside Goldman Sachs allows our Asset Management business to attract and retain the very best people for a long, long time. Here's the track record of our traditional long-only public market strategies in equity fixed income and quant. This is the relative performance data of Morningstar. It's not absolute returns, it's not returns against a benchmark, it's performance relative to competitors in that strategy over the last 3, 5 and 10 years. Our goal for investment performance is to be consistent and persistent. That's not a redundancy. Consistent refers to the volatility of performance and persistent relates to the duration of performance. Many people underestimate the importance to a long-term track record of being consistent and persistent. If performance is consistently above average, then over time, it will have a very powerful compounding effect on the long-term track record. Now I know and appreciate there's a natural competitive tendency to want to perform at the top decile. The problem is the iron wall of mean reversion tells us that if you spend time in the top decile, inevitably, you'll spend time in the bottom decile. That volatility of performance, high to low, is very damaging to a long-term track record and allows consistent and persistent performers to move up in the rankings. Now look at the slide behind me. I'm going to take you through the 3 time cohorts of the Morningstar data. Starting on the left. For the last 3 years, 65% of our funds have been in the top half. For the last 5 years, 69% of our funds have been in the top half. But for the last 10 years, 83% of our funds have been in the top half. Our goal is to continue to deliver consistent and persistent performance and to continue to compound that long-term track record. Our alternative strategies also have very strong track records. These are the 4 principal strategies in our alternative business. Each quadrant shows the gross IRR, the net IRR and the index for the particular strategy. I'm going to focus you on each quadrant on the net IRR since inception. Let's start upper quadrant left, with our corporate equity strategies. Those strategies, since inception, have generated a net IRR of 15.5%. Upper quadrant right, corporate credit, including both senior loans and mezzanine debt, those strategies, since inception, have generated a net IRR of 8.9%. Lower quadrant left, real estate credit. Those strategies, since inception, a net IRR of 9.8%. Lower quadrant right, open architecture, which we also call AIMS, Alternative Investments & Manager Selection, since inception, net IRR of 11%. The open architecture, AIMS, part of our platform is a very, very important part of our model. It allows us to offer products and strategies to clients that we do not manage ourselves. The open architecture feature runs entirely through our platform. It's available in liquidity strategies, fixed income strategies, equity strategies as well as alternatives. It means that we can construct a complete portfolio for a client that covers all the asset classes with both proprietary and third-party offerings. One other point before I leave this slide. The strong performance that we've had for clients has generated meaningful incentive fees for us. Through year-end 2019, the year just ended, we have $1.6 billion of unrecognized incentive fees. Now our accounting policy for recognition of those fees is very, very conservative. The $1.6 billion of unrecognized incentive fees will be recorded in revenues as we harvest the portfolios, sell the assets, which will depend on the life cycle of the investments and our focus on maximizing returns for our clients. $1.6 billion of -- to be recognized incentive fees. This slide deals with 2 other aspects of the platform over the last 5 years. On the left, you see that 2014, we've grown AUS in the business by $681 billion. Of that, $502 billion was long-term fee-based assets, the best kind. And of that, $198 billion, we grew organically. Didn't buy it through an acquisition, had no help from Mr. Market. We also added $179 billion in liquidity strategies. Again, you see the power of a multiline platform that can respond to client needs across all asset classes as portfolios need to be adjusted in different market conditions, risk on, risk off, cash, stocks, bonds, alternatives, back to cash. On the right on this slide, we answer the question, how did our active platform respond to the headwinds of passive investing? The best way to answer that question is to examine the organic, meaning what you did yourself, not acquisitions and not Mr. Market. Active, forget the passive, long term, excluding liquidity, fee-based flows into the platform for the period. [ Bases ] that metric, organic, active, long-term fee-based flows over the last 5 years, we've been best-in-class against the top 10 large public asset managers. Not surprisingly, we believe the rumors of the death of active management have been greatly exaggerated. We also believe that the success that we have can continue for 3 reasons. First, we have an investment culture that attracts the very best people. We surround them with the best processes, and we focus them on consistent and persistent performance. Second, we serve our clients holistically so we can fulfill all their portfolio needs across all the assets with both proprietary and third-party product. Third, we sit inside Goldman Sachs. Now every speaker so far has talked to you about the One Goldman Sachs approach, the synergies between the Investment Bank, the Global Markets, Wealth Management and Asset Management. I believe that the strongest beneficiary of the One Goldman Sachs approach is the Asset Management business. Because of One GS, our Asset Management business can more effectively source capital from individuals, institutions and Goldman Sachs. Because of One GS, our Asset Management business can more effectively source investments through the global network of Goldman Sachs. And because of One GS, we have access to the full library of intellectual capital that this firm has to continue to improve our operational and risk management processes. Now that concludes my description of the current capabilities of our platform. The mic will now pass to the next generation of Goldman Sachs from the greatest generation. Thank you so much.

So I'll apologize in advance. I can't match the joke repertoire of Tim. So I'll just keep going through the presentation materials, the mundane stuff. So now let's turn to our growth priorities, which are focused on 5 key areas, as you can see up here. First, we'll leverage the global platform, just described by Tim, to deliver holistic solutions and forge deep partnerships with major asset allocators and institutional clients. Second, in order to serve our clients' evolving investment needs, we'll continue to innovate and develop new investment solutions for our clients, which is something we've been doing for decades. Third, as described by Tim, Goldman Sachs has a long and successful track record of investing in alternatives, and we'll continue to scale our alternatives business through a third-party funds platform. Fourth, we'll continue to invest our balance sheet strategically in a way that supports our fundraising efforts, whilst also generating attractive return for our shareholders. And finally, we're embarking on a multiyear effort to further optimize and improve our on-balance sheet portfolio to drive significant capital efficiencies. Successful execution across these 5 areas will increase the recurring and -- recurring nature and durability of our revenues, reduce our capital intensity and significantly enhance the return profile of the business. To put our plan in more specific terms, as we continue to perform and deliver for our clients, the execution of our plan over the next 5 years will deliver $350 billion of net organic growth, $250 billion of which will come from traditional public market strategies and a further $100 billion from alternatives. I'll walk you through our fundraising plan in more detail, and then we'll talk about the drivers of how we'll accomplish this. Here we show our organic growth plan for the next 5 years. As you can see, the plan is diversified across all major asset classes, reflecting the strength and breadth of our existing business. On the traditional side, we show $250 billion of targeted AUS growth, with 60% coming from fixed income and a further 40% from equity. And on the alternative side, we're targeting $150 billion of total gross fundraising or $100 billion of net AUS growth after realizations. Importantly, over 80% of our alternatives growth represents the expansion of existing fund strategies, which we're successfully executing today, with the remainder coming from other existing investment strategies that we're currently executing on balance sheet. This growth plan leverages the strength of the existing investment teams and the firm's existing distribution channels. As John mentioned earlier, we recently created the alternative capital markets and strategy group to drive our alternative fundraising firm-wide, by supporting and leveraging our sales forces across Global Markets, Investment Banking as well as the Asset Management sales force. And this firm-wide approach to fundraising is an example of the significant commitment the firm is making to this effort. So coming back to the 5 growth priorities. As I mentioned a few moments ago, the first key focus area is winning with large asset allocators including pensions, insurance companies and sovereign wealth funds. Now these clients increasingly tell us, they want strategic partners with a full suite of capabilities rather than allocating assets across a long list of specialists. And given the strength of the current Asset Management business described by Tim, and the overall Goldman Sachs' franchise, we're uniquely positioned to deliver a holistic offering to these clients to be a one-stop shop for their needs, including advice and thought leadership on global issues, portfolio construction, risk management and hedging, proprietary and open architecture investment solutions, and in some cases, to act as an outsourced CIO. We already have the scale, and we've made the investments to do this better than anyone else. And we'll achieve this by leveraging, not only the strength of the existing Asset Management platform, but the entire Goldman Sachs' franchise, including Investment Banking, Global Markets, Private Wealth and engineering. Execution of this strategy with the largest asset allocators in the world will support organic growth plans across the platform. Next, on the topic of innovation, I'd like to highlight 3 important trends that are top of mind with our clients and share how Goldman Sachs is helping them adapt with innovative solutions. First is the shift to passive. While we clearly believe in the power of alpha generation and active investing, we recognize that passive strategies are now 50% of U.S. equity fund assets. Our solution is a suite of 22 ETFs that use active beta and other strategies to deliver alpha in a low-cost way. Second is the integration of environmental, social and governance considerations into our investment process and that of our clients, which is a topic that comes up in every client conversation these days. Today, we have $75 billion of dedicated ESG assets across the platform, and we offer solutions to our clients via capabilities developed in-house as well as through our Imprint Capital acquisition to help embed ESG across our clients' broader portfolio. And as a final example, we've built an enhanced liquidity investment platform, which you can experience for yourself in the demonstration area outside. And through this platform, which is targeted at corporate treasurer clients, we offer a simple, digital, liquidity management experience via a dedicated portal with a flexible design, analytics and trading, all integrated with a workflow and backed by the technology, expertise and professionals at Goldman Sachs. Switching gears, I'd like to focus on our alternative investing platform, where we're a top 5 global player today. We have true global scale and existing capabilities across the alternatives landscape. And as John mentioned earlier, last year, we took the significant step of combining 5 distinct investment teams into a single unit at Goldman Sachs. Here, our offerings include strength in 3 core muscle groups in private equity, credit and real estate. Now over decades, we've built experienced teams across these asset classes. As Tim mentioned earlier, for the broader Asset Management business, our alternative investing partners also have an average of nearly 2 decades experience at Goldman Sachs. And with this tenure comes the experience of prudently managing and investing capital for our clients and for the firm through different economic cycles. And this global team has the ability to invest across industries, across the capital structure and across the globe. In addition to our proprietary capabilities, we have a comprehensive open-architecture platform that Tim referred to. Here, we cover hedge funds, fund of funds, multi-asset investments, and we have the -- one of the leading alternative manager selection businesses in the world, where we continue to see strong demand. Finally, historically, we have funded certain investing activities, like the Global Special Situations group and growth equity with our own balance sheet money. Going forward, we're excited to open up access to these strategies to external investors through a series of new funds. Next, I'd like to turn to our on-balance sheet investing activities, which include both credit and equity investments. Investing remains core to the DNA of Goldman Sachs. We execute it with our world-class investing teams. And these activities have been a long-term value creator, generating consistent and attractive returns for our shareholders over many decades. Having this balance sheet investing capability also aligns our interests with our clients as we invest alongside them as partners, building trust, which in turn helps drive fundraising. It also allows us to provide a broader range of capital solutions to a broad array of companies than will be possible with a fund-only model. Finally, the strategic use of our balance sheet allows us to both seed new investments, as we're currently doing with our new flagship real estate fund, as well as to incubate new strategies ahead of raising third-party capital. Today, we have a $60 billion portfolio of investments. About half of that is credit of one form or another, both corporate and real estate, and the other half is private equity and real estate equity. This portfolio is highly diversified across a number of dimensions. It's very granular with approximately 1,000 distinct investments. It's diversified by asset class, industry, vintage and geography, and it's actively risk-managed. Across the global balance sheet portfolio, we undertake a rigorous multilayer approach to risk management, both at the individual investment level and at the portfolio level. This includes regular investment reviews to determine operating performance, marks, rebuy analysis, stress testing and hedging. And at the portfolio level, we operate within risk limits for credit, equity and real estate exposure. And finally, we leverage our strat and engineers to optimize the capital requirements, the funding cost and the hedging strategies across the firm-wide portfolio. Our investment track record for our on-balance sheet investing has been strong. Here, we show consistent asset yields in the mid to high teens for our equity investments, and in the mid to high single digits for credit investments over the past 3 years. These results are a meaningful and consistent contributor to our firm-wide financial performance. Our on-balance sheet investing track record also lends credibility as we look to open up our alternatives business to more clients and raise more third-party capital. And as I mentioned earlier, as we raise this capital, we're not embarking on new investing strategies, but rather providing access to clients to existing, seasoned strategies. Now although, we'll continue to actively use our balance sheet for the reasons I just highlighted, we will migrate the more capital-intensive activities, such as private equity and growth equity, into fund format, while remixing our balance sheet towards the less capital-intensive investments, such as credit, much of which we'll be doing alongside existing or new funds. So now let's put this all together. This slide provides a firm-wide illustrative look at the potential impact from growing third-party assets and increasing our capital efficiency over the next 5 years. There are 3 primary assumptions: first, a rather conservative 2% annual market appreciation; second, that we achieved our planned long-term fee-based asset growth of $350 billion; and finally, given the economics of alternatives, that we see a stable weighted average fee rate of 32 basis points. This results in an incremental $1.6 billion in annual firm-wide management fees. Meanwhile, the remixing of our balance sheet over time to reduce its capital intensity will result in $4 billion of capital coming out of the Asset Management business. The net impact will be higher management fees, offset by lower revenues from our on-balance sheet investments. Meanwhile, we'll be meaningfully more capital efficient, resulting in a highly accretive evolution in ROE over time. So in conclusion and circling back to where Tim started, we have a world-class Asset Management franchise today, with a number of competitive advantages that will enable us to win. We're a global player at scale across all asset classes. Our clients benefit from the power of the Goldman Sachs network and the Goldman Sachs brand. In particular, they're aided by our leading Investment Bank and Private Wealth business. We have a strong investment performance track record, supported by our experienced investment teams around the world. And we have a large, stable bank balance sheet, which we're able to use to serve our clients and drive long-term opportunities, which are an important differentiator versus our competitors. And as we execute on our strategic initiatives, we'll build a more durable, more recurring and more capital-efficient business, and significantly add to the return profile of the firm over time. Thank you. That's it from the Asset Management section and the Tim O'Neill standup show. I'd now like to hand it over to our partner, Eric Lane, to talk about our Consumer Wealth Management business.

Good morning. I'm Eric Lane. I'm responsible for the Consumer & Wealth Management business. I joined Goldman Sachs as an analyst in 1996. Back then, we didn't have a consumer business. Wealth Management was part of the equities franchise. We had less than $1 billion of revenue and less than 10% of our revenues came from fee-based assets. We've come a long way in the last 25 years. And that's why I'm very excited to talk to you today about our new segment realigned to focus on individuals. Lots of competition out there. So what drives our success at Goldman Sachs? Our advice-led, technology-enabled platform allows us to serve individual clients through all stages of their financial lives. As we focus on growth, we have a differentiated model in this space supported by a premium brand, strong client relationships including some of the best corporate relationships in the world, and ability to deliver all of Goldman Sachs to our clients and the build-out of a modern consumer business, where we started with a blank slate, no legacy technology, no retail bank branches. Our new strategy significantly expands our opportunities for growth. We serve clients across 3 wealth segments: ultra-high net worth, investors with greater than $10 million in assets; high net worth, the $1 million to $10 million segment; and the mass-affluent space, investors with less than $1 million of investable assets. Private Wealth Management in the ultra-high net worth segment is our largest business today. We're a leader. But as you can see on the charts, even leaders in any of these spaces have single-digit market shares. And we still see meaningful opportunities to grow this incredible franchise. We will grow the entire franchise from a position of strength through our Ayco corporate relationships, through the acquisition of United Capital, through the integration of our digital consumer business. We now have the ability to cover individuals across the entire wealth spectrum. These are all very large markets, trillions of dollars in each. Small movements in our market share in any of them will drive significant revenue opportunity for Goldman Sachs. We have a plan to capture it. So how does the Consumer & Wealth Management business fit in? On the left, you'll see, as Tim and Julian just went through, $2.3 trillion in client assets across our platforms. In the middle, you'll see roughly $850 billion of those assets come from our individual clients, $550 billion in fee-based product, the balance in brokerage assets. And on the right, you'll see that we have almost $35 billion in loans and $115 billion in deposits across the platform from both our consumer and wealth clients. Let me put a frame on the Consumer & Wealth Management business and give you a sense of how we've grown it. Over $5 billion in revenue. More than 90% of that revenue from fee-based assets or net interest income, making it a very stable recurring revenue business for the firm. We've shown an ability to grow the business organically over the last 5 years. We've expanded our adviser base by more than 50%. With the growth in advisers, our assets have grown by more than 40%. And as we just mentioned, we've more than tripled our deposits now sitting at $116 billion. This track record of growing businesses organically gives us tremendous confidence as we pursue our forward growth strategy. Our forward growth strategy aligns to our 3 client segments. One, in the ultra-high net worth market. We will expand our footprint by adding more advisers and by increasing the penetration we have with our existing clients. Private Wealth Management is a flagship business for us, large-scale business that has continually outperformed, but we still see room to grow. Two, in the high net worth segment. The integration of our existing business with the newly acquired United Capital gives us the ability to scale more effectively, and we see lots of opportunity to expand our reach by leveraging the firm's relationships with corporate clients. Three, in mass affluent, we are building a leading digital consumer bank by embedding our products where our clients work and where they shop. Let me spend a minute on each. We have built an amazing Private Wealth Management business. Today, it's the crown jewel in our Wealth Management franchise. It generates $3.5 billion in revenue, almost 70% of all the revenues in our business. 800 advisers located in 26 offices globally, serving nearly 13,000 of the wealthiest families in the world. This is an advice business, and our advisers are very experienced. The average tenure of a private wealth adviser is 14 years. Given our focus on retaining top talent, it's over 20 years for our top advisers. Not only are advisers very experienced, but they're also among the most productive in the industry, generating more than $4 million of revenue per adviser annually. This gives us a very big advantage as we compete in the ultra-high net worth segment. Even with a leading business, we capture only a 3% market share on a global basis. Adding 0.5% of market share here would add $650 million of revenue to Goldman Sachs. So how are we going to grow? First, we need to add more advisers. A typical private wealth management adviser covers 20 to 30 families. The more advisers we have, the more quickly we can scale our business. Over the past 5 years, we added 150 advisers on a net basis. Over the next 3 years, we think we can accelerate that growth and add 250 advisers, a 30% increase from where we are today. On the chart on the right, you'll see that in the U.S., we'll continue our process of hiring, training and developing talent organically. Outside the U.S., you'll see our growth targets are high, given our penetration levels in these markets are lower. We'll also likely hire more experienced advisers in these markets as we look to close the gap. In addition to growing the number of advisers, there is an opportunity for us to do more today with our existing clients. On the left, you see how our clients have currently allocated their assets. Given where we are in the market cycle, today, our clients have allocated more of their assets to cash and fixed income than we normally see, those levels sitting at 50%. As we find interesting market opportunities for our clients, we'd expect that mix to shift. On the right, you'll see our lending penetration. One of the greatest developments inside Goldman Sachs over the last decade is that we became a bank. In my view, Private Wealth Management has been the biggest beneficiary of that change. The ability to be holistic with our clients, not just to focus on the asset side of the balance sheet but also the liabilities, has changed the way we cover families. A decade ago, less than 1% of our U.S. wealth clients had a loan from us. Today, that number stands at 27%, an almost 30% change in a decade. As we scale our international businesses, we would expect our lending penetration in those markets to move closer to where we are in the U.S., a very big opportunity for us. And as John mentioned, given our new disclosure, it will be much easier for all of you to track our progress. Now let me move on to our high net worth strategy. Here, we will execute through Ayco and our newly acquired United Capital, which we have renamed Goldman Sachs Personal Financial Management. Let me take a minute and explain what Ayco is. Ayco provides financial counseling services to corporate employees. It's an incredible business. We acquired it in 2003, and we've worked to grow it organically ever since. Since then, Ayco's revenues have grown 4x. Its pretax, 8x, and its asset base today is more than 10x where it was back in 2003. Today, Ayco serves 435 corporations, including 60% of the Fortune 100. Historically, our focus was on providing executive counseling to the CEO and other senior executives. Increasingly, our clients are asking us to provide more holistic financial services -- financial counseling services to their entire employee basis. This was a big opportunity for us, and we made large investments in our platform to be able to do it. Today, we serve more than 1 million U.S. employees. Our wealth capabilities now span the full spectrum. We also plan to offer Marcus products through Ayco through our Marcus at work channel, which we'll talk more about in a few slides. As you can see on the right of this slide, there remains a big opportunity for us to grow. We aspire to add 30 new corporate relationships and 300,000 employees to our platform annually. This is a big market and a very achievable goal. We have a lot of confidence because our offering for corporate employees is distinct and unique. But don't take my word for it. Let's hear what some of our clients say about the valuable services that Ayco provides. [Presentation]

If you don't have Ayco, you should get it. By integrating personal financial management with our existing footprint in this space, we now have a business with 600 advisers and $85 billion in assets. Integrating the Ayco financial counseling tools with the technology of United Capital will give our personal financial management advisers a very unique offering from which we can grow our high net worth client base. We have a lot of upside here. Today, we have less than a 1% share of an $18 trillion market. We will grow in 4 ways. One, the business and the teams that we have today will continue to grow organically. Two, we have already begun the process of unleashing internal referrals from Private Wealth Management in Ayco. Historically, we would find opportunity in this space, but we didn't have a credible offering. Today, we do. Three, as we've talked about before, we'll expand our corporate relationships to cover the entire employee base. And four, of course, we can always grow inorganically by adding more teams. Adding 0.5% of market share in the high net worth segment would grow Goldman Sachs' revenues by $700 million. Now let me pivot and talk about our third client segment, the mass affluent, and our strategy for Marcus. You've heard a lot about our consumer business in the last few years. Let me be clear about our ambitions. We aspire to be the leading digital consumer bank. Our key competitive advantage is that we're a large bank with a balance sheet and a strong brand, yet we have no legacy business or infrastructure costs. We started with loans. We added savings and cards, and we're working to build out the balance of the digital products suite, including wealth and checking. Our value proposition is to provide our customers with products that are simple, transparent, valuable, personal and secure. We've made a lot of progress since our first Marcus loan in 2016. This is a really great slide and one that we're very proud of. In 3 short years, we now have 5 million customers, $60 billion in deposits, $7 billion in loan and card balances in a business generating over $850 million in revenue. This is only the beginning. While we started with products, we are now building an integrated consumer platform. This platform will help our customers spend, borrow and save. Our goal is to meet our customers where they are. And we'll do this in 2 ways: first, through our proprietary brand, Marcus by Goldman Sachs; second, by embedding our products and technology in the ecosystems of our partners. Today, we have existing card, loan and savings products, and we're working to build-out the balance of that product suite. We will add Marcus-branded wealth capabilities later this year and modern checking capabilities in 2021. Here, you will see our customer acquisition channels. Today, customers can access us through our site, marcus.com, or our mobile app for access to market savings or loan product, or through our proprietary channels like Marcus pay, which allows customers to pay for large retail purchases over time at the point-of-sale; or Marcus at work, which helps corporate employees better manage their financial lives. We also grow by embedding our products and technology in the ecosystems of our partners. The most notable example to date, as you've heard before, is our partnership with Apple on the Apple Card, which we believe to be one of the most successful card launches in the U.S. The Apple Card is simple, it's transparent, it's secure and it's fully integrated into the iPhone. It has redefined the credit card experience. Consumers can now apply for and use their digital card within minutes rather than wait days for the actual physical card to arrive in the mail. And when they use the card, the spending analytics and the integration are seamless. But what's most unique is that it sits on the Goldman Sachs' platform. This new card platform has dynamic capabilities, which we plan to use with more corporate partners in the future. In Marcus, we're always looking to improve and innovate. We're working to bring our customers a unified digital banking experience. What does that mean? That means we're trying to deliver a retail bank branch through your phone. Historically, you've only been able to access us through a desktop. We've now launched a mobile app and are planning to add new and innovative features such as budgeting tools and insights to help our customers manage their financial lives. We've made a lot of progress over the past 3 years, yet this is only the beginning. Let me show you what the future could look like. [Presentation]

Yes. We are building a modern digital consumer bank, yet 150 years of classic Goldman Sachs risk management remains. We built a very seasoned and experienced team to focus on this business for us. It all leads, as you'll see on the right, to a portfolio with appropriate approval rates and high FICO scores. We understand credit cycles. Rest assured, we are being measured and balanced as we grow, taking advantage of all the technology and experience we both invested in and accumulated over time. Let me bring it all together and run through the numbers. We are making a big investment in the Consumer business, and we have an incredible opportunity in front of us. In 5 years, we expect the Consumer business to grow to a place where we have $125 billion in deposits, $20 billion in loan and card balances in a business generating $700 million in pretax income. When you look at our segment margin on the left, 5% is not where we will be in the future. It reflects the investments we're making in a high-growth consumer business, coupled with the strength of an existing Wealth Management platform. Going forward, we expect to increase those margins to roughly 15% in the medium term, and we expect our margins to be north of 20% at scale, which is where our Wealth Management business is today. In conclusion, we have a very clear vision of what we need to do to execute our strategy. We've dedicated the appropriate resources and are making investments in the business to make this vision a reality. Personally, over the last 2 decades, I've been involved in building a number of businesses inside Goldman Sachs, specifically Private Wealth Management, Ayco and the Asset Management franchise. When I look at the opportunity we have to grow these businesses, I've never been more excited and energized about our strategy. And I'm confident we have the platforms to succeed in both the Consumer & Wealth Management space. Thank you for your time.

All right. At this point, it's time to break for lunch and you'll have an opportunity to interact with all the business leaders that you heard from this morning. We are going to have lunch on the 11th floor, which is our Sky Lobby. So you'll take the elevators out here directly up there. There will be 2 or 3 Goldman Sachs hosts at each table. Their bios are in front of you, so you can learn a little bit more about who you're sitting with. Please stop by the tech demos on your way out. There's some really cool interactive stuff for you to spend some time with. For those of you who are tuning in remotely, we will be back here at 1:15 sharp for a session with Richard Gnodde, our CEO of GS International. Thanks so much. [Break]

Well, good afternoon, everybody, and welcome back. I hope you had a great lunch. I must say, I certainly found it interesting. And what I particularly enjoyed was not the food so much, but the feedback. Next time, we'll do this in Europe, and the food will be better. But I did appreciate the feedback, and I'd really encourage you to keep giving it to us throughout the day. It's very useful as we think through the issues and the impressions that you're getting. So I'm Richard Gnodde, I'm CEO of Goldman Sachs International. In that capacity, I'm responsible for all of our businesses outside of North America. I joined Goldman Sachs 33 years ago in London in Europe, as we started to build out our M&A business across that continent. 10 years later, I went to Japan, then to Singapore and then on to Hong Kong. When sitting in Hong Kong, I was responsible for our Asian business. I returned to London in 2005, and assumed a number of regional and global leadership roles until taking on my current responsibilities. So I've really had the privilege to work across the world and to be involved in building out many of our international businesses. And so it really gives me great pleasure to discuss the importance of this international footprint to the firm and to run through some of the strategic and commercial advantages that it gives to the firm. Now simply put, complexity is a constant for our global client base. Today, it comes from nationalism, trade, other issues. Tomorrow, there will be something else. And as both David and John observed in their comments this morning, it is really this global footprint that the firm has that allows us to help our clients navigate the challenges that they face, whatever those challenges may be and wherever they may be. And so I want to leave you with a few key takeaways. First, Goldman Sachs' international growth really proves the firm's capacity to grow organically, patiently over time and to build businesses of very significant scale and to do so profitably. Second, we have ambition to grow further, both by growing with our existing clients and by taking on new clients by growing share. Third, there are a number of very significant breakout opportunities that we focused on. Some of them are geographic, others within our existing business portfolios, scaling alternatives, scaling our international private wealth business. And finally, I believe we can do all of this whilst at the same time, driving further efficiencies. So let's start with some very quick history. The journey began 50 years ago. In fact, in January, so this month, 50 years ago, we opened our first office in London, followed shortly by an office opening in Japan. These were really the foundation years for our international business. We moved senior leaders across the world. We hired local teams. Importantly, we embedded our culture into these teams. We started to build client relationships. But it takes time. As you can see from the slide, by 1990, our international operations were still a relatively small part of the overall organization. But roll the clock forward 30 years, a very, very different position. Goldman Sachs is present in all the key global economic hubs as you can see on the slide. Revenue is up over 20-fold to $15 billion, 12x the number of people, 5x the number of offices, strong diverse teams representing local and global capabilities everywhere. So this picture has taken us 5 decades to build. It's not been easy. It takes sustained commitment and determination. You can't just switch it on and off. Many have tried and failed. So this deep international footprint has brought real balance to the firm. And it has done so in scale as the previous slide demonstrated. Over 40% of the firm's revenues come from outside of North America and at a margin of 28% pretax. And this includes a 5 percentage points impact due to litigation. And so investing in this global footprint has been accretive to the overall firm. The strength of this global and local mix is well illustrated on the far side of this slide, a truly diverse and global team with over 140 different nationalities represented. The leadership group is equally broad and diverse, representing the makeup of our client base. 42% of the firm's partner and Managing Director group sit outside of North America, an average tenure of 13.5 years, so significant experience, representing 80 different nationalities. And so across this portfolio of businesses, we as a firm have the leading geographic reach and share. So that's from the clients' perspective. Importantly, what is the, so what, for our clients? Simply put, it enables One Goldman Sachs to solve client challenges anywhere and everywhere. I'll talk to you about 2 examples. The first is a local company in need of global expertise and global capital. I will focus on DONG ENERGY. Going back to 2013 in Copenhagen, Denmark, you had a private, state-owned energy company, a heavy carbon footprint, in need of a strategy that would transform its future and take it down a green path. Our private equity teams alongside our infrastructure investing group working with our investment bankers developed such a strategy. We put in place a new management team, a new Board and working with those groups, executed on the plan. At the invitation of the Danish state, which at that time was not in a position to invest its own capital, we mobilized our global capital and put it alongside 2 local Danish pension funds. The result, Ørsted. Today, the largest offshore wind company in the world, a 3x growth in market cap since its initial listing, a continued large holding in the company by the government. So a rewarding investment for the government, but also ourselves and our clients. And to this day, this remains an important financing and advisory client. The second example is a company with broad global ambition, looking for our local capabilities everywhere to help support this growth, CK Hutchison out of Hong Kong. As they have expanded globally, they've been able to rely on Goldman Sachs to acquire telecom assets in many jurisdictions across Europe and Asia Pacific to grow their global energy business and their retail business; to issue debt and equity to fund this growth distributed through our global securities businesses; and finally, at the center, our team in Hong Kong restructuring the entire group to deliver the structure that they have today. So the expertise that I highlight in these 2 examples is sought out by clients everywhere. Consider that, on the Investment Banking front, 39% of our M&A volumes over the last 5 years have had a cross-border dimension to them. Or on our Global Markets business, 20% of our global client activity is executed outside of the client's home region. As for the result of this franchise and this footprint, leading market shares. Now being global and being the leader globally requires consistent leading market shares across the world. We have the leading Investment Banking franchise, and Gregg Lemkau went through that this morning. He also reviewed the way that we think about market share. And as you look at this slide, you can see on the M&A starting at the top of the slide, #1. But as you go from left to right, our market share has actually weakened. We're #1 in Europe, #1 in Asia Pacific, more recently going into Latin America, we've got more work to do. So as you dig further, there's more opportunity. And I could make the same comments as I go down the slide, and clearly, when you get to the bottom of the slide, there are a number of businesses there, where we've got significant market share potential. But we know where the gaps are, and we're working to fill them. I'll give you an example in the Global Markets business on the equity side. Go back 3 years, Euro STOXX 600, a market share of 8%. The MiFID II regulations come along, consolidation. We invested very significantly in our execution capabilities. Today, our market share, 15%, a growth of 1.9x over that period. So we know where the gaps are, we're working to fill them. So what of the forward? The important point is, we have one consistent global strategy. On the left-hand side of the slide, you can see that we're expanding our corporate coverage. The Investment Bank is picking up new clients across our European footprint, and they're doing so in the size range of $500 million to $2 billion, as Gregg discussed this morning. We've added over 500 companies in that size. We've, in fact, increased the overall footprint by 800. And to date, that expansion has delivered 170 new mandates helping drive revenue growth. We also continue to grow and deepen our footprint in new geographies. Just last month, we launched our onshore FICC business in South Africa, giving us access to corporate clients and to local bond flows. Last year, we launched our onshore equity business in Saudi Arabia, ahead of its inclusion in the MSCI and the FTSE EM benchmark. Turning to an example of diversifying our business mix with new products and services internationally is the middle of the slide. And I'll just highlight the success of Marcus U.K. This is the story that is not yet 18 months old. $7.6 billion of deposits raised, 400,000 new accounts. And so success in this private market highlights the strength of our brand away from the U.S. and the competitiveness of the product that we launched. Coming to the right-hand side of the slide, let's talk about efficiency. John Waldron focused on this this morning, but those messages apply across the world. We have over 5,000 people in Bengaluru. We've also got scale in Singapore and Warsaw. All the firm's divisions across all time zones are supported from these centers. They also provide leadership as we drive digital transformation and process automation initiatives around the world. I will now talk to you about some key regional opportunities that we see. Let's start with Europe. The U.K. is already a very significant contributor to the firm, and we have significant market shares there. Let's turn to Continental Europe, the second largest economy in the world. Given the weak growth and the other macro headlines that you read about Europe, you may be forgiven for thinking that this business is a laggard. Far from it. It has some noteworthy trends that are creating real opportunity for the firm. EU bank balance sheets continue to be under pressure, leading to growth in capital markets activity. Competitors are repositioning their businesses, giving us room to grow share. Negative rates are creating challenges, creating significant opportunity for our structuring and investing and advising businesses. And finally, Europe's leaders push to complete the banking and capital markets union will over time create significant further growth for the organization. And so we're investing in our footprint to capitalize on these opportunities. Over the last 3 years, we've increased our EU-27 head count by around 70%. That's a way from our investment in Warsaw and it compares with a 13% increase in our overall European head count. So let's go east and talk about Japan. We are one of the leading foreign banks in Japan. We have a strong and stable business there. We benefit from tenured leadership across all of our businesses. And given the existence of developed capital markets, there's been the opportunity to scale a significant business, and we have done so. We've also built one of the leading Investment Banking businesses in the marketplace. Through our Merchant Banking teams, we've been an active investor for a long period of time. Over the last 25 years, we've put $6 billion to work in that marketplace, and that's yielded a $7 billion return to the benefit of our clients and to the firm. So taken together, this is a strong franchise and a very significant contributor to the firm. And in fact, if you had to rank the contribution by country across the organization, over the last 5 years, Japan would rank 3. So very important in terms of providing diversification to our business. Let's talk about China. Clearly, a market with a very significant future potential in terms of growth. We've been onshore in China for over 25 years. And over that period, we've been the #1 foreign bank ranked in terms of M&A activity and equity underwriting. Through this period, we've invested $10 billion and driven $15 billion in value creation, and we continue to see immense opportunities in a shifting landscape. By the mid-2020s, our Goldman Sachs research teams believe that there will be a revenue pool in excess of $100 billion across our portfolio of businesses. We're well positioned to participate in this growth across all of our businesses. We have a differentiated position, given our long-term participation in the marketplace. We are very active in the early privatization wave, already leading that wave across a number of different industries: telecom, energy, financials. We've got strong relationships with many of the country's leading private sector companies and have been investing heavily in terms of building relationships with the new, emerging private sector in that country. We've also sought to partner with China's leadership from a policy perspective, providing thought leadership as they seek to build a financial system that's fit-for-purpose and can help fund the enormous growth that, that economy is enjoying. As John said earlier, we plan to secure a 100% ownership of our onshore joint venture. But importantly, when we established that joint venture in 2004, we did it in a way that gave us effective management control. And so since that period of time, we've been able to build a Goldman Sachs standard team, fully integrated into our global network. And so when we secure 100% ownership, we will have a team that's already fully integrated, up and running and that should give us an advantage and a head start over many of our competitors. We will continue to invest significantly across all our businesses in this growing market. Let me now highlight 2 business lines, where we think there is significant market share potential. First, our alternatives investing business. Before diving into this slide, I want to highlight, again, an example of One Goldman Sachs at work. As we've laid out our footprint in many new markets, we've had a significant advantage by putting our investment bankers, alongside our Merchant Banking, investing professionals, really a traditional Merchant Banking approach. First of all, by putting our own capital to work, we've been able to signal real long-term commitment to the marketplace. Second, by these teams working together, we've been able to bring the full suite of financing alternatives to bear for the benefit of our client base. It has helped accelerate our growth. So turning to the slide on fundraising. You can see that over 50% of third-party capital raised for global strategies is raised outside of the U.S. On the investing side, we have a team of over 400 investing professionals spread across 18 different countries, $110 billion of alternative assets invested internationally, with over $20 billion invested in developing markets, a well-diversified portfolio. This gives us strong confidence in our ability to grow this business. The investing team is in place, it is local, it understands local market nuances. This gives us a clear edge. We've got strong international fundraising capabilities. We have a unique sourcing engine, given the strength of our Investment Banking footprint, and we have a track record of delivering strong returns, as Julian and Tim went through earlier this morning. And all of this at a time when there's robust demand for this asset class. So turning to this slide, it highlights the breadth and depth of the platform by asset class and geography. The dots show the geographic spread and selective investments on the right. I won't go through them all, but I could highlight many successes. From Taikang Insurance Group in China to the iQ Student Accommodation platform in the U.K., from the Nexi payments platform in Italy to Japan Renewable Energy in Japan, IHS, the towers business in Nigeria, to building out oncology centers in Brazil. The fact is, by asset class, by geography, by industry, we have deep and proven experience. So as a platform, it is uniquely positioned to offer attractive investment opportunities for both institutional and private client investors. And I'm going to come back to the private client point in a second. But in short, this international track record gives us significant confidence in our ability to meet our $100 billion fundraising target. So let's turn to international private wealth. Given our starting point, the growth opportunity for us is self-evident. If you look at this slide and you compare our 1% market share in the international business with a 7% in the U.S., the upside is there. If we grow that international share by 1%, it will yield an incremental $170 billion of client assets. This exceeds the size of our current business. So why grow now? First, the competitive playing field has been leveled. We deselected ourselves from large parts of the wallet as standards were too low in areas such as tax transparency, money laundering and the like. That situation has changed. Standards have been raised, and so we can now compete. Second, we spent the last few years reengineering our footprint. International and U.S. margins are now aligned, and our business has demonstrated an ability to grow. In 2019, we delivered record revenues, profitability, and client assets. We have over 200 advisers, $150 billion of international client assets. The business model is proven and positioned to scale further. Finally, and this is a very important point, our client offering is distinctive. Consider yourself a private client of the firm. You have access to our advisers, you have access to the #1 Investment Banking footprint, the advice they can bring, the structuring advice they can bring. You have access to the insights and the liquidity that comes from our Global Markets business. And importantly, to the proprietary alternative investment offering that I've just discussed. And I go back to Eric's presentation of earlier this morning. For the first time, we have a true lending capability in the international arena, very important for this client base. So with that as background, we plan to increase our number of advisers by 50% across both Europe and Asia in the coming years. So let me conclude where I began. The international business is significant, and it is profitable, 40% of the firm's revenues. We have a proven ability to grow over the decades, and we see significant growth ahead across all of our businesses. I focused on 2 significant geographic opportunities: China and the EU-27; a number of specific business lines, alternatives and private wealth. And very importantly, we believe we can do all of this in a way that is accretive to the overall profitability of the firm. And so with that, it gives me great pleasure to welcome 2 of my partners to the stage, Stephanie Cohen and Marco Argenti, who are going to talk about innovation. Thank you.

Good afternoon. My name is Marco Argenti, and I'm the co-CIO of Goldman Sachs. I spent the last 30 years working in technology and the last 6 leading technology for Amazon Web Services, where I ran some of the larger cloud services such as Serverless and Internet of Things. My career has always been characterized by transitions moving along with what I saw as waves of disruption in the industry, in 2008 -- in the early 2000s with mobile, in 2008 with apps and with the rise of the cloud in 2013. I now see an equally profound opportunity with the disruption of financial services that is taking place and will characterize the next decade. Transactions are becoming automated, and the volumes are increasing, and data generation is growing exponentially. Regulatory frameworks are becoming more and more complex. And companies of any size will have to scale up their technology investment in order to remain competitive. Players will emerge that will be able to offer services that are tailored to the financial industry, the same way, large and generic cloud providers emerged as providers of IT services in the past decade. I believe that Goldman Sachs is uniquely positioned to lead this transformation and that's ultimately why I decided to join the firm. I'm now focused on 3 critical priorities to lead this transformation. One is to build on services such as Marquee, the Apple Card and transaction banking and create a firm-wide platform to accelerate the pace of innovation. Externalize those services as a platform for our clients to drive durable, fee-based revenue. And then, recognize that developers are first-class citizens and deliver a great developer experience in everything that we do. Ultimately, the strategy will allow us to do what we've always done, which is to make our clients' financial lives better. I will now turn it over to my partner, Stephanie Cohen, our Chief Strategy Officer, who will share a bit about our approach to innovation and the building blocks of our platform strategy.

Thanks, Marco. I'm going to start where Marco just ended, the incredible opportunity we see from combining world-class financial services with world-class technology. And in some respects, and with just a little bit of humility, Marco and I are a metaphor for this combination. I've spent my entire 20-year career at Goldman Sachs. It's the only full-time job I've ever had. And Marco has built and grown many leading technology businesses. The 2 of us are going to show you how and why Goldman Sachs is uniquely positioned to capitalize on this combination of strengths. This morning, David discussed our purpose, our values and our competitive advantages. Innovation is critical to achieving our purpose, and it stems from those core values. And it's one of our most significant competitive advantages. What I'm trying to say is innovation is not just an afterthought, it's core to every single thing that we do. Innovation may start with ideas, but really, it's about execution. It's about delivering for our clients, our employees, our communities and our shareholders. Throughout today's sessions, you've seen my partners discuss throughout this call, innovation and action. They talked about transaction banking, Marquee and the Apple Card. We'll use those examples and others to explain what it is about Goldman Sachs that allows us to consistently and repeatedly innovate to drive shareholder value. I'm going to go through 3 main things. The first, the fact that given our business mix, we have deep and trusted relationships with the world's most innovative companies. Second, that we take a dynamic approach. And third, and this is really the most important thing, we have a long track record of producing results. And you saw those results in the video at the beginning of the presentation. More and more innovation at Goldman Sachs is really about building platforms. Marco talked about that, and he will later dive deeper into how platforms will create a better client experience, how they will drive more durable revenues and how they will allow us to operate more efficiently, perfectly consistent with the 3 strategic pillars that everyone has spoken about today. So let's dive deeper into our position in the innovation economy. We advise, we finance, we invest alongside and we partner with the most innovative companies in the world. In 2019 alone, we advised on over $1.4 trillion of M&A. Most of that was driven by industry transformation. But I think it's fair to ask, what in the world does that have to do with innovating in our own businesses? Actually, it's the essence of One Goldman Sachs. David spoke to you earlier about our relationship with Apple, and Eric showed you the credit card. This is the perfect example of the benefits that come from having a long-standing and a trusted relationship with a leading company. But there are so many other examples. There are actually over 100 pre-IPO companies that we are invested in, and we use their products every single day. It includes companies like DiligenceVault, Second Measure, Pensando, GitLab, Carta and many more. And my guess is, some of these companies you've heard of, and some of them you have not. That's the point. It allows our people to have access to cutting-edge technology and talent, and it drives returns in our Asset Management division. Ultimately, it's our breadth of capabilities, it's our global reach, it's our long-standing client relationships that allow us to see around corners and do a better job of turning those ideas into businesses. So on that note, why don't we turn to execution? My guess is I don't have to remind you, for most of our 150-year history, we have built everything ourselves. Now with the advent of cloud technology and open source, we have the ability to harness capabilities from outside of our organization and focus on building when we really have competitive advantages. This is a concept that is core to our dynamic framework, for every opportunity we can consider, whether we should buy, whether we should build, whether we should partner or whether we should invest. And sometimes, the answer is a combination of those 4. The framework may be simple, but there are a few things that we must do well. We have to have a clear understanding of what our strengths are, and we want to be the partner of choice. That means we want to be the first call every single time. And on top of that, we have to constantly test and iterate. We need to be willing to experiment. Success for us is clear. We're focused on driving a more durable and a higher-returning business mix. And the platform strategy we are pursuing should unlock large pools of durable capital-light revenues and create stickier relationships with our clients. So let's look at some of the products and services we've developed and how they fit into that framework. This morning, Eric took you through our consumer strategy. And a simplistic view would be that we built our consumer platform. The reality is that it's a combination of buying, building, partnering and investing. Our savings business was started by buying the GE deposit platform, and we supplemented that with an organic build. Today, we have grown it to $60 billion in global digital retail deposit from almost a standing start 3 years ago. In the U.S., Marcus is one of the fastest-growing online banks for direct consumer deposits. But when it comes to our consumer loans business, we did build that. But if you look at the individual components, they are a combination of buying, building, partnering and investing. And this, I think, is amazing. If you use zoom out and look at the entire consumer business, only 30% of the logic was coded inside of Goldman Sachs. This is a major departure from how we would have built new products just a few years ago. It frees up our engineering talent to focus on things that are really unique and differentiated rather than commodity infrastructure. When we talk about partnering, we really mean 2 things. One is it could be a distribution strategy. That's what we're doing with Intuit on personal loans. And the other is embedding technology and services into other ecosystems, like the Apple Card. And that last capability is the consumer version of our platform strategy, and Eric described it earlier. It allows us to take products and services that we build for our own clients and then give it to other clients so that they can embed financial products into their ecosystems. This strategy will drive top line growth, and it will create scale efficiencies. Now let's contrast how we built our Consumer business with what we're doing in Global Markets. If there is any business where we have competitive advantage in building large, scalable platforms, it is Global Markets. Jim and Ashok talked to you about the multiple ways we're innovating to both better serve our clients and to operate more efficiently. There are so many examples I could go through, but I'm just going to pick one. I'm going to pick our equities trading platform. We are building a quantitative trading platform to serve systematic clients. It will be as fast and as scalable as our top competitors. The real innovation, however, is that we're doing it in more global markets, more than 50. We're doing it across swaps and cash, and we're integrating it into prime risk and operations. That's the edge. It's a complete solution. We have the benefit of building that platform with today's tools. And if we build it correctly, it will improve the experience, not just for systematic clients but for every client in global markets. But there's really one more thing. We live in a world where there are less than a handful of players that can both invest in and then maintain an equity trading platform. In fact, if you look, 30% of the volumes running through our quantitative trading platform today are from other broker-dealers. I'm going to say it again, just so this point really hits home. Our regional trading competitors are using our platform today. This is really what we mean when we say we're going to lean into competitive advantage. No one has a deeper heritage in the equity markets. We have the best trading, sales, engineering and operations talent in the world. We know how to meet the specifications of an exacting client set, and we understand how to operate in a globally complex regulatory environment. I think it's fair to say that almost no one else in the world could replicate this. And luckily for us, we can leverage these advantages that I just laid out with the experience that Marco has had in building platforms in other industries. So I'm going to let him take it from here.

Thanks, Stephanie. When I listen to Stephanie talk about the trading platforms in global market. I'm reminded of the opportunity that Amazon saw in offering IT services such as compute and storage on-demand in the cloud. When AWS was conceived, it wasn't just an internal product to support the growing needs of amazon.com. It was built explicitly to be an external platform for others. Amazon saw the opportunity to help other companies manage their compute and their storage needs by leveraging what they built for themselves. Now that IT cloud providers are an established business infrastructure, there's a clear opportunity for vertical cloud providers to offer more specific services to other players in the same industry. That's the opportunity that we have here at Goldman Sachs, to deliver unique capabilities, such as risk management, trade execution services and digital consumer banking directly to our clients as a service. Ultimately, our goal is to remove the heavy lifting to our clients so that they can focus on running their business. In the past, banks built technology solely for internal use and that resulted often in purpose-built, monolithic platforms that were hard, inflexible to decouple. But the speed and the scale of business today means that we need to provide a full range of services to clients that are offered directly without human intervention. And the technology that we have at our disposal today is mature enough that, that can be done very effectively. Today, we already offer an array of such services through Marquee to transaction banking and through our consumer platform. More broadly, you can think of those services as part of a financial cloud. What do I mean by financial cloud? Cloud technology is like a collection of building blocks. Each one performing a specific function. By providing those services as a digital platform, clients can get the functionality and benefit from the scale and security of bank-grade technology that is fully compliant with all the regulations. The beauty of such a model is that it puts the customers first. Clients can tailor their consumption by picking and choosing which building blocks to use without having to commit to a large upfront investment. Building the financial cloud means that we expand our client touch points from 1 to 3 through our traditional world-class sales team to a browser or digital portal and by embedding APIs into the clients' applications and workflows. What are APIs? APIs are essentially customer service for computers and their audience is developers. And here comes the realization that we had when building those APIs, which is developers are first-class citizens and clients of Goldman Sachs. Across all our clients, developers are driving decision-making and adoption of new technologies and the same way that developers ultimately determine the success of AWS. By focusing on the developer experience and making our APIs easy to use, developers will embed them into their workflows and to their applications, and that will drive further consumption of Goldman Sachs products and services. Let's use Marquee as an example. Every piece of functionality that Marquee offers such as data pricing models, risk analytics, all of them are available to end users through the browser and to developers through the APIs. I have built applications myself using Marquee and I have to say that, honestly, the developer experience is really great. But we aim to do even more. While we have an excellent and talented engineering pool. We also are hiring from the best companies, tech companies in the world to make our services even better. So what? Why is this platform strategy so important? Well, we are using technology to unlock the potential of the firm's intellectual property. We act as our own first customers to take advantage of internal efficiency and build a great user experience across all our services. That will help ensure that external developers will find our services easy to use, so that they will embed them into their technology and streamline their own workflows, applications and operations. And with that, we generate durable fee-based revenue and drive scale advantages that will benefit the firm and our clients, ultimately creating a flywheel that improves our platform over time. I'm really thrilled to lead our engineering organization, and I look forward to updating you on the progress as we make this vision a reality in the months and years to come.

So we're going to do a Q&A session now. If folks would just -- wouldn't just mind touching the button next to their microphone, that's how we all can hear you in the room. And just announce your name and we'll get started, okay? Please, go ahead.

Julian Wellesley from Loomis, Sayles. Can I come back to Global Markets? Firstly, a couple of years ago you disclosed that more than half your clients in Global Markets were asset managers and hedge funds, you were over-reliant on them, so can you possibly give us an update on your success in diversifying away from there? And secondly, I would argue that the 10% ROE target in that business is still at or below cost of capital. So as a Plan B, what would be the trigger for further capital allocation reduction beyond the 20% that you've done already?

So, I appreciate the question. And with respect to the client base, what we had said a handful of years ago was that our business was very heavily weighted to hedge funds but actually it was underpenetrated in asset managers and we thought there was a real opportunity for us to extend our penetration into asset managers. And we've done that quite successfully. Jim and Ashok put up on a chart some of our rankings from a client perspective and I think that our franchise and our platform with our clients today in our markets business is certainly much broader than it was 3 to 5 years ago. That said, and this speaks to the [ wild share ] gaps that we have, we have still been evolving to really look at our client base and with a One Goldman Sachs' approach, really maximize the opportunity and the relationship we have with our clients. And that's a new ethos, a less-siloed ethos in our Global Markets business. So as we said, we're rolling out One Goldman Sachs to over 100 clients, a significant number of those are very, very large clients that touch our Global Markets business in a significant way, and we still think there's share opportunity there to push on that. On the second part of your question with respect to capital in the business, and I know there'll be a bunch of questions on this. I think you've really got to step back and think about the fact that our Global Markets business is part of an ecosystem that matches with our investment bank, our world-class Investment Banking franchise. Everybody else reports these as a corporate investment bank. And we put up a slide during one of the presentations today to highlight that since we don't have a corporate center, if you fully take capital out, and this was an assumption because we did a pro rata with the other firms, it looks like our returns, at this point, even with the litigation that's running through, look in the range for these businesses. So fundamentally, given the more prescriptive regulatory approach to capital in these businesses, the Global Markets businesses broadly are businesses that, if you look at them independently, they come close to meeting the hurdle, and we're very, very focused on getting it to hurdle. However, when you wrap it into a corporate and investment bank, you get all sorts of benefits in the ecosystem, and you get returns that make sense and that we think we benefit from. So I don't think you can look at it purely individually. We are very focused on getting the returns up in that business and very focused on optimizing the capital. But I think you have to look at it as a very important pat of what makes us a great investment bank.

Thank you. Brennan?

Thanks for the day, this is really, really cool and really, really interesting.

Well, thank you. That's nice to hear. That makes me feel good. All the work that this team has put in today.

So, when we think about the $1.3 billion of expense efficiencies that you guys laid out, I know that was over a 3-year time frame. But can you help us think about -- I would guess that you probably have a decent line of sight into a lot of that. How should we think about it over those 3 years? Is there a way you can help us consider when that will be realized over that frame?

Sure. I know there's going to be a lot of focus on how this models and how to think about it. It's not linear, as you would expect. But we're also -- we want to think about it in the context of a 3-year movement, and I'm also not going to suggest that it's front-loaded, either. And one of the things that you're balancing, when you're doing an expense optimization program like this, you're dealing with people, you're dealing with very, very important business franchises, and we want to do it in the best way we can, the least disruptive way we possibly can. So we've given ourselves this 3-year period to work through this. We obviously have a lot of work. We've got a lot of line of sight. I think this is an organization that in the past, when we've said we're going to do something with respect to expenses, we do deliver on it. Obviously, we have to go out and execute. But for the moment, we're putting it as a 3-year target. We will execute it in that time period. And what I expect will happen as we start going quarter-to-quarter and year-to-year, you will have more transparency as we start executing on it. But I'm not going to give a clear road map today.

Okay. [ Mike ]?

Yes, I told you I was going to ask you this question. So we have to wait 3 years to hold you accountable. So that's -- I guess -- I'm guessing it's January 17, 2023 is when we'll know if you got your 13% ROE or 14% ROTCE. So what are key milestones we should look for externally to make sure that Goldman is on track?

Okay. Well, I'll just highlight that on that date that you threw out, that will be my 61st birthday. And so if you want to put that as a good benchmark, we can use that as a for benchmark day. Look, we've got a 3-year plan. We're going to execute on that plan. I think that one of the things that we tried to do today, and if you look at these presentations, there are a bunch of metrics. There are a bunch of key performance indicators for the businesses that we've attached to these businesses and have given you some transparency on. I would hope that you feel, as we change the way over the last year we're doing our earnings calls and the information we're giving during our earnings calls, and the fact that I said when I presented that we will be updating you once a year in a formal way on these targets, I would expect that you'll have metrics, key performance indicators and discussions as we go. But it's a 3-year plan. I think that there will be ways for you to see our progress over the 3 years. We're going to be very focused on finding ways to communicate as we make progress over the 3 years. I just don't think any of us are going to go to sleep for 3 years and wake up 3 years from now and say, "Where are we?" So it's a process. We're trying to be more transparent. We're trying to be more communicative. And as we move forward, I think you'll have more information to help you gauge how we're progressing.

David, I was hoping to get a better sense, since you highlighted the benefit on the capital side, the $4 billion on the investments -- as you see some of that [ release ], one of the things that I've been thinking about is, one, how do you have transparency or confidence in that number, given the opacity of the Fed stress test? And then secondarily, as we think about the return profile for that remixing of those assets that you plan on doing, how different is the return profile versus the private equity holdings?

Sure. And so it's a complicated analysis. We spent a lot of time. I'll certainly start by saying, you work with the base assumption based on looking at the Fed and the stress test today. The stress test could be better. It could be worse. And obviously, one of the things we have to adapt if the Fed evolves as a target is we have to adapt with that. I think it's fair to say that the chances of -- I think we operate viewing that having less equity on balance sheet and more equity and fund structure is a better directional path for us to travel. Our base thought process on looking at it is we're swapping the equity revenues for fee-based revenues, and over a 5-year period of time, assume revenues are flat, but we will be able to [ optimize ] into get products on balance sheet. So as opposed to thinking about it from a return perspective, think about it from a revenue perspective. Revenue is flat. But over time, we'll be able because the efficiency of having a different mix based on the current Fed stress test to take capital out.

Okay. Yes, Kian?

Kian Abouhossein, JPMorgan. 2 questions. First of all, the initiatives that you have, are they all self-funding because you talk about $4 billion of capital release and Asset Management...

I'm sorry, the initial?

The investment that you're making, are they all self-funding? And in that context, you talk about $4 billion of capital release in the Asset Management business. How should we think about the $4 billion? Will they be used to fund some of these initiatives, the -- basically a growth plan? And how should we think about capital generally because clearer ROTE target is based on some kind of payout and buyback assumption. So can you talk about capital a little bit more around your return targets?

Sure. Stephen was very explicit in his presentation today that we're giving you a CET1 target and not a payout ratio, because we want to be flexible with our ability to deploy capital where we see opportunities to serve our clients, but also to generate accretive returns for the firm. And so if you're looking at the Asset Management business and this mix, this rebalancing that we were saying, some of the capital could get redeployed in other places to support our investment, where we'll have capital needs, and some of it will get returned to shareholders. I think one of the things that we're quite proud of is we have been a good steward of capital. And if we don't have a good use of capital that's accretive to the returns of this organization, we will get it returned to shareholders. But I think we've got a pretty proven track record of being able to compound book value over a long period of time and doing that. But we want to be nimble. We want to be flexible. Stephen showed a slide where you could see over the last 2 years, how there have been significant dynamic redeployment of capital in our organization over the last couple of years and so that's the way we'll think about it. That's the framework. Can we drive accretive returns someplace else or should that capital be returned?

And in that context, also, if I can just ask a question about fixed income. If I look over the longer period of time, you seem to have lost some market share in fixed income. Clearly, it's not always comparable, I understand that. But it looks like, as you mentioned earlier or James did, that there's a lack of maybe investment in the traditional side of the client base as well as the more liquid products and financing part of the product cycle -- product suite. How should we think about the timing of regaining some of that market share by basically these investments that you're making in these areas to basically bear fruit? How should we think about timing?

Well, I'll just highlight, one of the things that's very important in thinking about when you talk about what our fixed income market share is or isn't is the time period you look at. So it's actually interesting, if you went back and you looked at 2004, '05, '06, that period of time, and looked at what our market share was based on our share of wallet from the big firms that play in fixed income, and you look at where our market and wallet share is today, it's roughly equivalent when you look back at that period. There was a period of time where we had enormous outperformance in that business and our market share spiked way, way up, much, much higher. And if you start at that period of time, then it looks like our market share has come down. But if you drew the line over a 15-year period, you kind of see our market share, it spikes way, way up. We outperform, it comes down. But if you look across, it's actually gradually increased a little bit. What we're really focused on -- that was a little bit of history, but we're really focused on what's going on right now, kind of where do we take over 1.5 years ago and how are we driving forward from here. And actually, over the course of the last year, we've taken a little bit of market share and wallet share, and we continue to be very focused on that. So there is a gap when you look at our markets business at our FIG business of $1.2 billion that we're very, very focused on. And we think that we're -- there's a portion of that gap, let's say, $500 million that we can close during this period that we're focused on.

Okay. Yes, please.

I echo Brennan's side comments, great day. So many of the initiatives that you discussed here today sort of are drawing on the power of One Goldman Sachs. And I just wanted to know how are you incentivizing this cultural shift in the organization? And of the many connections that you're trying to encourage at the firm across different divisions, which initiative is sort of most reliant, in your opinion, on your people embracing the concept of One Goldman Sachs?

I'm going to answer the second part first, and then I'll come back to the question on incentives. But I can't pick a business and say this business is the most important in the context of embracing One Goldman Sachs. But I'd like to step-up at a high level and think about some of the things we said in the presentations today. We really believe that the ecosystem of businesses we have and the quality of our products and services for the traditional clients that we've really worked with are very, very powerful, and they're particularly powerful when you really get out of silos and really think about the clients' experience. So one of the big messages culturally we've really been trying to talk about is this is an industry, for sure, and many of you here will recognize this, and our firm certainly was like this. This is an industry where the whole industry grew up in selling products in silos. That is the way the business worked. And actually, you look today and our clients touch the firm across multiple products. They need to integrate all of these. And one of the things we keep talking about is instead of thinking about what is my silo, what is my responsibility, how is the client experiencing its interactions with Goldman Sachs? And how can we make that whole experience better? And if you make that whole experience better, you're going to capture more of their mind share and you should capture more of their wallet share, the wallet share will follow. And so I think this is a very important kind of pivot or reorientation that's not just limited to Goldman Sachs, it's kind of an industry perspective, because this has been a siloized industry, a product-driven industry. And I think given technological change and also, the business change, it's more important that you really put that into the ethos of the organization. And so I'm not going to say it's more important for this or that business. I think it's required across all these things that we're doing and there are benefits to the ecosystem by getting it right across the firm. So that brings to incentives. And so John talked a little bit about this in his presentation. One of the things we're really trying to do when we started with the Management Committee by putting tangible metrics in place that we could track on how people were being evaluated, much more of a structured set of metrics that we could think about, we put more performance-based compensation into the Management Committee on a go-forward basis. And now we're moving that structure down into the partnership and more broadly across the firm. So incentives are -- it's not a light switch on, light switch off. It's an evolutionary process. But we're trying to gear the organization more towards longer-term performance and there obviously is, in compensation, a significant amount of compensation for everyone in the partnership that's in the form of equity. And we're trying to continue to find ways that we can track on different metrics than the historical [ tide ] of revenue, which obviously had such an important part in this. And so we've started, and you'll hear more as we progress.

Yes? Right here.

Can I come back to consumer and mass-market wealth management? And I believe you said that you wanted to be the leading digital consumer bank. So...

All-digital consumer bank.

All digital. So -- and I appreciate the point about not having legacy infrastructure. I would also point out that JPMorgan and BofA are investing heavily in this with a different business model. But I'm curious what the unmet need is? Or how you think you can do better than the existing products?

Sure. And look, one of the things I think you have to think about the Consumer Banking business or really our mindset around it, JPMorgan, Bank of America, Wells Fargo, U.S. Bank, they make up more than 50%, just over 50% of U.S. consumer banking. They will continue to make up over 50% of U.S. consumer banking. And what we're doing, they're going to have great digital products. They have good digital products. They're going to continue to have big branch systems. I think last year, JPMorgan, for example, added very significantly to its branch network. We start in a different place. And I think one of the things at a high level we really believe is if you take the other 50% of consumer banking and you look at the other 4,000 banks that make up that 50%, with the changes that are going on and the disruption that's going on, the platforms that are needed, the capital that's needed, puts us in a very interesting position, because we're a big bank, we have the big balance sheet, we've got a big capability to invest in technology and therefore to invest in disruption. We're looking to take share from the other 50% and create a different kind of offering that for someone that's really looking for an integrated service that puts it all in the palm of your hand, this can work. And if we do that successfully and take some share, we'll have a very, very successful business. How over the next 10, 20 years, it evolves from there as the broader disruption affects consumer banking more broadly, we'll try to be adaptive and nimble and make sure we carry on from it. But the first step is we think we can build an interesting product. It's not going to take share from the big guys. They're going to continue to be great. But we can have a nice business.

All right. Christian's hiding in the corner over here.

If you can see me, Christian Bolu.

I can barely see you, but I can hear you.

Christian Bolu, Autonomous Research. 2 questions. I guess, firstly, how do you think about the sensitivity of your ROE targets to a recession, say, like a 2001-type recession? And really, what I'm trying to figure out is, is there a minimum ROE you're willing to tolerate even in a downturn?

Yes. So that's a really good question, Christian. And as you'd expect, we spent a lot of time thinking about it. I think one of the things we want to be really clear about is we're making investments to strengthen Goldman Sachs for the long term. We think that's our responsibility as stewards of the organization, and we have to drive shareholder return while doing that. You and I could have a discussion about what the next recession will look like, and there could be all different variability about that. The variability about that will affect the decisions that we have to make, but we're going to be committed to these long-term investments. I'm not going to give you a minimum ROE target. We have levers that we can pull in the context of a business slowdown. But we're going to be very focused on what the slowdown is, what relative performance is. And I think what you tolerate has a lot to do with relative performance at that point in time in the cycle. But we are committed to making these investments and getting through the J-curve, but we'll pull the levers we can pull to maximize the returns for shareholders even at a difficult environment.

Okay. And then quick one just secondly. On Investment Banking business, you run a pretty successful business there. It's done very...

Sorry, run a...

On the investment, IBD business, you run a good business there, it's done very, very well. I guess the question would be, why are you even tinkering with it? If I think about it here, you are asking them now to go sell a transaction banking. You're putting some targets around diversity for IPOs. You're building an alts business, which arguably could have conflicts of interest. There a lots of things here that at the margin could impact that business. So how do you think about protecting the strength of that business relative to your [ broader ] targets?

As you point out, it's a great franchise. I don't really think that we're tinkering with it. I think that we're growing it and expanding it and taking advantage of the great franchise that we have. With respect to what you said about alternatives, and I think this is really important, we have been in the alternatives business for 30 years. We have been very large in the alternatives business for a long, long time. Our investment bankers have been a major sourcing engine for investments for ourselves and our clients for a very, very long time. There can be friction with that at times, but there's enormous benefit to our clients and to our franchise from that. And so the fact that we are, in a more organized way, growing our alternatives business is no different than what's actually gone inside this firm. It's just been less transparent, I think, or less organized. So I don't feel like that, in any way, shape or form, is hurting what we're doing in banking. In terms of selling transaction banking, we have deep relationships with these corporations from CEOs down to treasurers, and we lend a lot of money to these companies. M&A is episodic and very sporadic. We're constantly in dialogue. If we have an offering with technology that benefits our clients, they want to hear from Goldman Sachs on it. And so that is not a -- that's not a difficult sale for our banking franchise. So I actually think it strengthens our banking franchise. When you have more products and services that are of a high-quality and are differentiated that you can talk to your clients about, gives you more of a reason to engage with your clients, I think it strengthens the franchise.

All right. Glenn here has been uncharacteristically patient.

Because I want to go to dinner, too. Maybe at a high level, I know it's not so simple, but if you have this Asset Management business that earns a nice return now and you're adding to it and an Investment Banking business that earns a really good return now and you're enhancing it, the third-party alts business will be a nice return business at scale. I guess the question is, did you have any conversations along the way of, okay, if we build the consumer side out, it makes the firm more durable, but it's not the highest ROE business. It doesn't get the highest multiple in the marketplace. Should we just plow all our money into the big return sides of the business?

Look, I think we've always -- we've had a lot of discussions about our portfolio and our mix. At a high level, I think that you -- I think that strategically, where we came out a number of years ago, and I think it's the right strategic direction, just 20 years ago, there were 5 investment banks in the United States and 6 banks that had global ambitions, now there's 6 banks and we're 1 of them. The regulatory capital regime, if you're going to be a bank, favors certain activities. And for us to be a bank and not mix those activities into diversity of what we do probably doesn't make sense for us. The biggest thing strategically was we had to build the deposit base, and there are a number of ways that you could get out of that. At that, we decided to do it digitally, and we think there are a lot of reasons why that was the right decision, and I think we're off to a very, very good start with that. But as we started exploring that opportunity and looking at the disruption and looking at what we can do in terms of building platforms, we actually thought, you know what, this is a good business. And we actually gained conviction on our ability to have a nice business in the space that diversifies our revenue mix, that makes it more durable over time. And we believe, given the way we're building it, the returns will be accretive to Goldman Sachs. I think the connection also to wealth management and what we can do potentially with wealth management over time, which is why we've aligned, and you had Eric presenting on it, a consumer wealth management business, where we're really serving individual customers of Goldman Sachs, I think there's opportunity there that can also be accretive to returns. So there's a tendency, and I understand this, that everybody wants to look at these businesses in very siloized ways and drill down on the returns. And by the way, we do that, too. But at the same point, we're trying to build the ecosystems and platforms with connectivity, and we think that's where you really get opportunity to expand returns over time.

Yes, right back here.

Yes, a 2-part question. With some of the business mix changes and other changes that you're talking about over the next few years, do you think a 13% capital ratio requirement could possibly adjust downward? And then, secondly, what do you think about the valuation of the stock at 10x earnings and a little over 1x book?

Well, on the first question, on both those questions -- on the first question, our target is 13% to 13.5%. If we thought that it was going to be lower over the next 3 years, we would have given you a different target. Can I conceive of something happening in the world where we might come back one day and say it's lower or higher, absolutely, but I'm not going to speculate on that now. And in terms of our stock and the multiple it trades [ out of ] book and earnings, you'll all be the judge, if we do a good job over time, I'm sure we'll deliver, I think we'll deliver for shareholders. And hopefully at some point, our multiples will look different than they look today. But we're not going to worry about that. We're going to run our business because we know if we deliver, we should do better.

Betsy?

Just a question on the revenue side of the expense ratio. I know we spent a lot of time talking about the expense side. But just thinking about that 60% midterm target, it feels like maybe it's a 3-ish percent of growth you've got kind of embedded in the model. And just wanted to understand, is that a bit of mothball? Or is that something that's a stretch goal? And maybe a way to answer it, too, is when you think about the opportunities, not only in the legacy core large businesses, but in those businesses you're building, where do you look to, to drive that revenue growth and potentially the upside from 3%?

Yes. So what we've -- we -- look, we're putting out targets for the first time. We obviously want to be sure that across a range of a business opportunity or revenue, as you look at it, funding and expense that we can drive returns higher and meet those targets. Obviously, the world will fluctuate, in a normalized operating environment, we feel very good about what we've put out. We've laid out a lot of initiatives, and the initiatives from a revenue perspective really fall into 2 categories. They fall into strengthening the existing businesses. And I think we've walked through and talked about a bunch of these things. I think that we're good at expanding our banking footprint, when we put our mind to it and we hire people and we start covering new companies, revenue will follow through that. And so I think that's an example of an opportunity that will come. In the securities business, they are getting much, much more focused. And I mentioned this just a few minutes ago, on the way we really target the 100 biggest clients and how we look at weaknesses or gaps there. And so I think there's revenue opportunity there to do better and take wallet share. And so in those existing businesses, we think there's real wallet share opportunity. We think in wealth management, we haven't really broadened our footprint in ultra-high net worth management in Europe and Asia for a variety of reasons, and we think we'll take some wallet and some opportunity there. You then get into these investments that we're making, and we laid them out quite clearly. Transaction banking, there could be real revenues associated with that. You get into the consumer business, there's real revenues associated with it. So I think there's good revenue upside. We don't want to oversell that. But it's our job to get these things built and over more of the medium-term as we get up the J-curve, okay, and get through the J-curve, revenue should start growing faster than expenses and it should add more accretively over time. But in the 3 years, this is what we want people to think about over the next 3 years, that's our plan.

Devin, and then we're going to go to Steve, who's going to freak if we don't get to him soon.

So just trying to connect some of the dots better on the consumer opportunity and the outlook there. And you spoke a lot about kind of creating this integrated and holistic platform. But when I look at what you have today, there's still some gaps on the asset and liability side, and I guess that's the future opportunities. So when we look at, I guess, the slide of what you have today and a couple of the initiatives coming, like what else should we think about could be coming down the road in terms of innovation to fill in some of those gaps and be more holistic with the end client? And then, is that at all contemplated in some of the targets that you put out around the $125 billion in deposits and $20 billion in loans?

So -- and there was a slide that Eric had, I believe, that kind of lays out what we have in terms of savings. We don't have checking. We're working on a wealth product. He talked about the wealth product this year. He talked about the checking product. I can certainly imagine if you go further out more products, okay, where we could partner potentially to add more products, but our goal is to continue to expand the range of products and have a relatively full-service offering in a digital format on the phone. When we looked at our plan over the course of the next few years, we've given you very specific things in the areas that we're in. It doesn't include the expansion of those broad array of products. But over time, if we want to be able to really scale this, we will have to add a broader suite of products, and we're focused on that. But I think we've done a very good job over a short period of time proving that we can build something here. I thought the slide -- I personally thought the slide was very powerful that laid out 5 million customers, $60 billion of deposits, $7 billion of loans starting from scratch in over 3 years. And so we're focused on this, but we want to build it out over time.

Okay. Steve?

I was actually more intrigued in the -- on the efficiency ratio target and the expense guidance. So between the difference between your business growth revenues and business growth expenses, you imply like 150 basis points of operating leverage and then a separate [ 350 -- 100 ] basis points from the expense efficiencies that are separately laid out, which implies 500 basis points over 3 years. And I know that over 3 years, that's not a lot on an annual basis. But Goldman did lay out an efficiency -- an expense reduction target before, and we didn't necessarily see an increase in returns. So I'm trying to get a better -- and unlike, say, some of the bigger banks, like a Bank of America, who generated a lot of efficiency ratio improvement like closing bank branches and seeing customer behavioral changes, which actually led to lower unit costs. I feel like it's different in terms of how you're laying out your expense initiatives in that you want to take out the parts of the pyramid, et cetera. Can you just talk about the confidence you have in being able to achieve that expense initiative goal while maintaining the revenue momentum even in the business as usual, sort of?

Sure. And look, I mean, I'm not living in a bubble, so I walk out of the room and I hear the buzz, people are concerned, can we hit this expense target without affecting revenues? And so I want to be clear. As we've looked at this, we do not see the expense decisions we're making across the business affecting our ability to drive revenues. I do think there are a couple of differences in what you highlighted that I want to highlight a little. And if I don't get it all, I might ask Stephen to chime in. But in the past, when we've dealt with expenses in this firm, and we've said we're taking expenses out, it's a very different thing for this firm, the way the firm was always historically managed, to say we're taking expenses out, because what that meant was we were simply cutting expenses. You had no transparency, no framework, no model, no plan to kind of put that into context. What we're trying to do here is actually give you on a plan a context of what we're going to do and how it all ties together. The way this firm used to cut expenses was, we said it's a tough year. Revenues are down, expenses have to cut, and we took a knife and we went like this. We just -- if we were cutting 3%, it was just 3%. And this is a very different thing. We went out, we did a lot of work. We got help in doing a lot of work. We really looked at the structure of our organization, the opportunities for efficiencies with technology for front-to-back processing, for really changing processes in the organization, spans and layers on our employees and execution, and we came back with a real substantive plan. We said, okay, we can do this to create more efficiency and free up the capacity to invest in our business. And so now we have a plan. We're going to execute against that. We don't believe it affects the revenue that we have or the aspirations that we have, and we're going to try to give you more transparency as we go. I mean, is there anything there that you think I missed?

No. I mean, we have this conversation...

Take your mic. Oh, you have a mic.

Yes, I'm mic-ed up. We had this conversation over lunch. I think the ambition that's reflected in the efficiency ratio walk is a lot about creating operating leverage in the business to help fund the investment. That is at the core of the 3-year period that we're looking at. And creating that operating leverage is important to grow the business without detracting from the ability to generate revenue. Some of what David is talking about in terms of the work that we've done -- that we had done, including using others to look at our business objectively, was around, for example, spans and layers in the business. So did we build up over time too many layers in certain operational components of our business? Were there people that were managing enough individuals? Or was it too narrow from a span point of view? Creating efficiency in the way in which we run the firm is not really putting at risk at all revenue growth that will come, it's creating operating leverage in the business so that we can continue to build out and grow the firm. And I think that's at the essence of the way we laid out that chart. There's revenue that's going to come from business. There's revenue that comes from funding optimization. There's inherent cost in generating that revenue. And separate from that, we have the ambition to harvest $1.3 billion of efficiencies in order to help create the leverage to do just that.

The only thing I'd add to that is just that we're not really cutting back the footprint. In fact, we're adding the footprint all over the firm. So you got to think about the client-facing part of the firm is actually on the offensive. We're growing footprint. We're really trying to be more efficient in the way we're delivering all the different services around there. So it's really more middle and back which is where that savings is coming. The front end of the firm, I would actually argue, we're investing and putting more of umph behind. It's a pretty big difference.

Over here, Gerard?

Gerard Cassidy, RBC Capital Markets. David, can you share with us in the transaction banking and consumer business, you gave us the J-curves. It looks like it's going to take 3 to 4 years to get to that profitability. How does that compare to other products that you have introduced? You gave us some good history of Goldman being innovative with new products. And then, second, when you get to profitability, is it going to come primarily from economies of scale covering your fixed costs, a reduction of the start-up costs? Or will there be price increases where you could pass that along to your customers?

Well, the history of our investing in businesses, there are a number of businesses we've built over long periods of time that went a long period of time without making money. I'm not going to be able to quote it, so I might quickly look at some people here. I don't know where Richard Gnodde is. How long did it take for us to make money internationally in Europe?

25 years.

Yes. Okay. So we spent 25 years -- you saw that international business. We went...

That's starting in 1970, though.

That's starting in 1970, so really, from 1970 to 1994. Now that isn't, and I'll be clear, going to happen here. But Asset Management, how long did we go in asset management before?

15 years.

15 years? You've got a -- we're in a different place and the world's in a different place, and we're in a different place in an organization, but I do think it's really important, because I think this is one of the strengths of Goldman Sachs is we have a track record of building businesses with a long-term view and really turning them into really great businesses, and that requires an ebb and flow with it. I think we have a really clear plan in both the things you mention to get through the J-curve and get to profitability. I'm not in a position to really, at this point, speculate on what kind of pricing power we'll have, where we'll be. But these are durable, recurring revenue businesses that offer reasonable margins and are accretive to the firm's overall returns. And I do think, given the position of our platform and who we are, if we do compete well on the products and services, continue to add value, over time, our position should strengthen. And that's what we've seen with our Asset Management business over time. That's what we've seen when we look at our international businesses, our international positioning. So we have to get through the J-curves on these. We've got very specific plans. We will get through the J-curves, and then we'll talk more about where we think they can go and how we think they'll evolve.

We have one here in the back row.

Matt O'Connor, Deutsche Bank. So the $20 billion consumer loans target that you put out for 5 years, I think that should alleviate concerns that you're taking on too much credit risk in the consumer book. But then, of course, the question is, are you doing enough to make it worthwhile? Is it enough scale to be profitable? Is it enough to kind of assume other risks, right? Because there are risks in consumer lending, especially the mass market, that say the rest of Goldman traditionally hasn't had. Then I do have a follow-up. It's a little bit related.

Look, I think one of the things we've continued to say is that we're being very thoughtful and very prudent about how we expand that consumer lending. And so we've given a target looking at that, at this period, that we're measuring. A cycle and change in the cycle could affect that target over time. And I do think, over time, we'll build a bigger consumer lending business as we have more experience, as we have more of the cycle. I appreciate the comment, because that does put in perspective that it's not like we're going up to $100 billion of unsecured credit, taking massive risk given the size and scale of the firm. But we're going to be very thoughtful about it. We learn as we go. Last year, we slowed down a little bit of what we were doing in the market's lending platform, because we didn't like some of the early experience. We data checked, then the second half of last year, we saw a better experience. And so we're going to manage it very, very tight. We think we can build a very profitable business with those numbers that's really accretive to Goldman Sachs, and then we'll build from there.

And then just a follow-up question. As you think about kind of through the cycle charge-offs in the consumer book and then any guesses on peak losses as you model it out?

Do you want to comment, Stephen?

I think it's too early across the whole of the portfolio to sort of speculate as to where losses are. I would say to you that both, as it relates to the unsecured credit through Marcus that David was referring and even in the early days of the card portfolio, our loss experience is playing to what we had otherwise modeled. David referenced the fact that we had made adjustments as we got more data about our own book relative to third party. That just makes us much more educated about the portfolio we have. And so we're comfortable that we're in line with what had been budgeted. And obviously, the reserve build plays as the portfolio grows.

We're going to take our last one up here, and then David will be at cocktails.

Jeff Harte, Piper Sandler. Hey, as we talk a lot about kind of embracing the bank model and the attractiveness of deposit funding and stuff comes up, when I look at your balance sheet, I'm actually more concerned with the ability to grow higher-yielding assets. So I mean, my questions would be, one, are there limits as to what you can invest these deposits you're growing so quickly in? And then, two, what can you do to kind of improve the asset turns or the velocity of the balance sheet? I mean, can -- against taking less credit risk, can you actually grow loans more quickly?

Yes. So we're spending a lot of time in thinking about that and balancing that. I think we have a reasonable plan that we're comfortable that we can meet with the appropriate yielding assets, the deposit growth that we're generating. But I'll let Stephen comment just a little bit more because he's the one that's spending a lot of time as we grow and wrestle through this.

I would say only that it's always important to remember in the context of deposits we raise, particularly in the U.S. Bank, that though they are raised largely through a retail channel, not exclusively, but largely through, they're not limited to the deployment of the assets that are consumer assets. So for example, our interest rate derivatives book sits in the bank. We're migrating our foreign exchange book into the bank. So there are a range of assets, all of which are eligible to sit in the bank that benefit from lower cost of funding that we can raise through the consumer channel. And so I wouldn't match it one-for-one, if you will, in terms of consumer assets themselves. And I would say that the returns on those businesses sitting in the bank at a much more competitive funding rate proves to be an ever more attractive proposition for us.

Okay. Great. Thank you, David.

Thank you.

Okay. So I'm very excited about our breakout sessions today. Many of you were kind enough to answer so many questions about the type of issues you'd like to spend more time and dig in on. So we have 4 breakout sessions today. We are going to start at 2:50 here in the auditorium with Fixed Income Investor Relations. That's with our Treasurer, Beth Hammack; our Deputy Treasurer and CEO of GS Bank, Carey Halio; and our Head of Liquidity Risk, Rajashree Datta. Right across the hall in 100A, we'll have a breakout session on the future of market structure. That's with Ezra Nahum, who's the Head of Global Market, Engineering and Operations; Liz Martin, who's the Head of Equities, Electronic Execution; and Amy Hong, who's the Head of Market Structure Strategy. Our second session is at 3:30 here in the auditorium. We will have risk management. That is with Brian Lee, our Chief Risk Officer; Karen Seymour, our General Counsel; Sarah Smith, Chair of Global Compliance; and Sheara Fredman, our Chief Accounting Officer. Sustainability will be again across the hall in 100A with Asahi Pompey, who is the Head of Corporate Engagement; Margaret Anadu, who's the Head of the Urban Investment Group; and John Goldstein, who's the Head of our new Sustainable Finance Group. So with that, I would just like to extend my sincere thanks to all of you for being with us today. I hope you leave with a much clearer perspective of our forward strategy and the excitement we all feel in the future of Goldman Sachs. Thank you.

Okay. Good afternoon, everyone. Thank you so much for joining us today for the Fixed Income Investor breakout session. I'm Beth Hammack, the firm's Global Treasurer. I've been at the firm for 26 years, and I'm a member of our Management Committee and co-Chair our Asset Liability Committee. Outside the firm, I serve as the Chair of the Treasury Borrowing Advisory Committee, which is a group that helps to advise the U.S. government on debt management issues. Many of you are fixed income investors, and we intend to talk about Goldman Sachs from a credit perspective today. While you heard about the growth opportunities earlier, you also heard David, John and Stephen talk about risk management. It's core to everything we do at the firm. And I'll spend some time to talk about Treasury's role in helping to conservatively manage the firm. We'll talk about how we support the firm's strategic priorities, and we'll drill down a little bit further on the funding optimizations that Stephen explained in his presentation. After that, we've left a lot of time for question and answers, and I'll invite 2 of my colleagues, Carey Halio and Rajashree Datta, to join me on stage to do a moderated Q&A. Carey is the CEO of Goldman Sachs Bank U.S.A. and the firm's Deputy Treasurer; and Rajashree is our Global Head of Liquidity Risk. You can submit your questions either via the Investor Day app or via the e-mail address that you see on the screen. And so with that, let's dive in. As you can see on the slide, at a high level, the role of Corporate Treasury is to manage the firm's asset and liability risk by raising firm funding and allocating financial resources to support client activities. We're the intermediary between all of our businesses that generate funding and need funding. And we have a rigorous funds transfer pricing framework in place to help govern that process. Let me give you a practical example. When our investment bank wants to make a loan to a corporation, they'll come to us for that funding, and we'll look at what rate, what currency it's denominated in, whether it's fixed or floating rate, and the tenure of that loan to provide the right type of funding. Similarly, we'll buy the funding that our Marcus Corp. consumer deposit business raises, paying again, close attention to the rates they're paying and the behavior of their underlying client base. But ultimately, we think about our sources and uses of funding holistically. We look at asset/liability mismatches and we'll develop a long-term funding plan to support the firm's strategic priorities. As you'd expect, we manage this plan dynamically as both markets and business strategies evolve. But away from facilitating the day-to-day funding, we're all risk managers. We set limits on our businesses, and we run daily stress tests to ensure that the firm is well-positioned through a variety of scenarios. Let's move on to funding and liquidity management, and we'll dig deeper into the priorities that Stephen laid out this morning. You'll remember this slide from his deck earlier, and I'll go through the 3 tenets of our strategy in a little bit more detail. The first one is to diversify our funding mix. By increasing the proportion of our funding -- of our unsecured funding, which comes from deposits rather than wholesale debt, we'll be able to improve the firm's cost of funding. For every $10 billion, we replace wholesale debt with deposits. We estimate we'll save the firm about $80 million a year in interest expense. Again, dependent on the level of rates, credit spreads and the shape of the yield curve. But importantly, this mix shift is more than just a new funding channel for the firm. It's a less credit-sensitive source of funds as over 90% of our consumer deposits are insured. The second tenant of our strategy is enhancing our asset/liability management. We've run the firm very conservatively over a long period of time. And we have a weighted average maturity on our debt at 8 years. Now this profile was appropriate for our historical business mix, which was heavily weighted towards our market-making businesses. But with our new strategy that emphasizes more diversified funding profile as well as more lending and fee-based revenues, we'll have the opportunity to modestly shorten the WAM of our wholesale debt. Now we intend to remain conservative, but we do have room to reduce our liabilities in line with our assets. Collectively, we expect these 2 initiatives to drive our interest expense lower by $1 billion over the medium term. The third tenet of this strategy, which Stephen noted is not included in current forecasts, is that we have a longer-term potential to recalibrate the size and mix of our liquidity pool. We hold a considerable cushion in excess of both internal stress models and regulatory requirements. As our business mix changes, we may have the opportunity to extend the duration and shift the composition to increase the yield on this liquidity pool, which we call our Global Core Liquid Assets or GCLA. For every 10 basis points that we can improve the yield on our GCLA will increase the firm's revenues by $200 million per year. And again, it's not included in our current forecasts because we intend to remain conservative and we'll embark on this shift in line with the business shift. Okay. So let's turn on to deposits. As Stephen walked you through this morning, over the past 10 years, we've successfully grown our consumer deposits, but there's lots more opportunity ahead. Initially, the vast majority of our deposits came from our Private Wealth Management business and brokered sources. As you can see from the slide, in 2015, about 30% of our unsecured funding came from deposits. The 2016 acquisition of the GE deposit platform and our launch of Marcus, provided a real growth engine for consumer deposits at the firm. And to date, we hold $60 billion of consumer deposits. If we add in all the other channels, deposits are $190 billion, and we've organically increased the proportion of our unsecured debt -- of our unsecured funding to 40% from deposits. Over the medium term, we believe, we can continue to raise at least $10 billion per year across the U.S. and U.K. in consumer deposits. If we add in all the other channels, like transaction banking and our brokered sources, we're expecting $100 billion of deposit growth over the next 3 years. It's important to note that this growth is a key part of our strategic priorities to grow our Consumer business and to launch transaction banking services. With this growth, we will evolve our unsecured funding base to a 50-50 mix of debt and deposits, but we aspire to do even more over the longer term. Let's spend a little bit of time on liquidity risk management. We primarily manage the size and allocation of our liquidity pool based on our Modeled Liquidity Outflow, or MLO. The MLO assesses our liquidity risks -- potential liquidity risks, under a combination of very conservative market-wide and firm-specific stressed scenarios. We're continuously refining our methodologies to reflect changes in the markets and in our business mix. And because our internal stress testing is tailored to our own business, it tends to be more binding than the regulatory LCR requirement. In the fourth quarter of 2019, our GCLA averaged $237 billion and our eligible HQLA averaged $229 billion. At these levels, we were comfortably above our MLO requirements and will report an average LCR of 127% for the period. Though we will remain conservative, we're continually evaluating our requirements based on our business needs and on our mix of funding. As we execute on the funding diversification plan and as the firm increases its durable and fee-based revenues, we'll have the opportunity to recalibrate from the conservative levels you see on the right-hand side of the slide. Okay. So to wrap up, let's take -- talk for a minute about the transition away from LIBOR, which we expect by the end of 2021. This is going to be an enormous undertaking for the marketplace and for our firm, and I want to highlight a number of actions we've taken to help manage the process. First, we appointed a Chief LIBOR Transition Officer last year, and we established a centralized program office to ensure preparedness via greater accountability and coordination with global stakeholders. Goldman Sachs currently has $40 billion of vanilla unsecured debt outstanding and $9 billion of preferred stock, which referenced LIBOR past the 2021 date. We're closely monitoring the markets and looking for opportunities to diversify our funding using alternative reference rates that will be suitable in a post-LIBOR world. We want to be at the forefront of the market, but move at a pace that's appropriate for our investor base and that supports market liquidity more broadly. In that vein, last year, we issued $1 billion SOFR-linked floater out of GS Bank USA. The issue met with great demand given its innovative structure, which mirrored the derivatives markets. Similarly, we've issued 3 fixed-to-floating or fixed-to-fixed preferred stock deals that referenced 5-year notes when they switch to being floating in 2024 or 2025. In terms of the firm-wide exposures, the majority of ours are in derivative format, where we expect a reasonably orderly transition, given industry-wide ISDA protocols. But away from derivatives, we do not have an extensive legacy book of consumer assets, which referenced LIBOR. We will continue to be an industry leader in the transition, and we're committed to a seamless transition for our clients, the firm and the marketplace at large. So with that, I'm pleased to invite Carey and Rajashree on stage. Carey Halio and Rajashree Datta have both been at the firm for just over 20 years. Carey, as I mentioned, is the CEO of Goldman Sachs Bank U.S.A. and the firm's Deputy Treasurer. And she began her career in our credit risk management department. Rajashree is the firm's Head of Liquidity Risk and has spent the majority of her career split between corporate treasury and liquidity risk and is intimately familiar with our risk models, having written a number of them herself. So with that, we'll start with a couple of questions that we've received from you over the past few months. And you can continue to submit them through the Investor Day app and through the e-mail address up there.

Okay. So Carey, let's start with you.

Sure.

We've spent a lot of time talking today about deposits. Can you provide any more guidance on our targets and which businesses we can fund with those deposits?

Sure. So as you mentioned, we expect to raise $100 billion of deposits over the medium-term across all of our channels. And one of the things that's interesting, as we do this sort of transition from being reliant on wholesale funding to more reliant on deposits, more recently, is we're trying to grow deposits, where they're strategically linked to our businesses. And so what I mean by that is where we have a real relationship with the customer. A great example of it is transaction banking, which you've heard a lot about today. We're building a new funding source for the firm, a new revenue source for the firm, but we're leveraging very long standing, very deep relationships across the incredible Investment Banking franchise that we have. So we think that will help us grow that funding source. And then, obviously, the consumer and the wealth expansions are other examples of this. With respect to your question on what we use to fund it, Stephen stole a bit of the thunder in the Q&A session on this question as well, but it is a question we get a lot. So the deposits can fund activities in our bank entities. We have 2 primary bank subsidiaries, a U.S. bank and a U.K.-based bank. And so what we're looking at in terms of the activities in those banks is the businesses that are in there already. So we have 80%, for example, of our HFI loans across the firm that are booked in our banks. But also as we build new businesses, we're making sure that they're in the bank to begin with. And so that -- the example of that would be the Apple Card, where we built it from scratch, completely in the bank. And then there are other businesses, sort of, the third category is businesses that exist outside of our bank entity today that we think could be in our bank entity. And so APEX is an example that we've talked about before. The complication with this last category is that it's really hard to do, right? It's a multiyear effort. It's a client-by-client exercise. And we have to repaper them and then make sure we have the systems built and the capabilities built in our bank entity, and so it's just going to take some time.

Okay. So Rajashree, with that deposit growth, can you help us understand how we think about the stickiness of these deposits? And how do you model the liquidity characteristics of them?

Sure. When we look at all of our deposit channels, we consider a range of attributes when we think about deposit stickiness. So we think about contractual features, insurance coverage, balance size, relationship length and so on. We put all of that together to determine the stickiness of the deposit. Obviously, once we have determined the stickiness of the deposit, we're focused on growing those channels that we determine to be the most sticky. So for example, our Marcus deposits are more than 90% insured, and we view them to be relatively more sticky than some of our other channels. We have, therefore, grown that pretty significantly the last few years, in fact, by more than 5x in the U.S. since 2016. We're also very focused on deepening our existing client relationships to enhance stickiness. So to give you 2 examples: one, introducing operational services in transaction banking, or introducing some of our new product features in our Marcus platform.

Great. So the question that I get asked most often, and this one is coming from Hima Inguva, with Bank of America. Carey, with all of this deposit growth, how much debt will you issue this year? Are you going to give us an issuance target -- which I think she [ may not return clearly ], but I'm going to put out there anyway. What's our appetite for a long-end issuance? And what's our approach to calling debt in the year ahead?

Right. So as you all know, we had a significant transition in 2019, in particular, with negative net issuance in our benchmark program of $15 billion. We do expect maturities to continue to outpace new issuance in 2020, but to a lesser extent than you saw in 2019. But in 2021 and beyond, we're going to need to be, sort of, more nimble and think about the opportunity set, our business mix, what client needs we have and so forth. And so that will be a little bit more dynamic. In terms of the long end of the curve, I guess, I would say that, as you mentioned with this slide, we're looking at one of the strategic focus areas in terms of mixing our -- reshifting our funding mix, is to shorten the WAM of our funding, which has been quite long relative to the maturity of our assets. And so that's been a bit purposeful to be sort of out of the long end of the curve more recently. And then in terms of calls, the decision to make a call, on a particular note, would be dependent on factors at that particular moment in time when the call comes due. So our funding liquidity position, the regulatory treatment and any sort of economics of the transaction. So for example, in December, we did issue a call for our 1-year U.S. dollar note. At the time of the call, we looked at our funding and liquidity position. We looked at the fact that we had lost TLAC credit for the remaining maturity and the relatively expensive coupon versus other 1-year funding opportunities. So at that time, it was very logical to issue the call notice. However, I would say, just because it might seem obvious or seem like the right decision or logical from an external perspective, there could be internal factors. And so also in December, we didn't call a fixed-rate note, and that was based on some of the internal factors that I mentioned.

Yes. I'll just add on the long-end piece of it, specifically. While we do intend to remix our WAM to be modestly shorter than where it has historically been, we want to be dynamic and meet investor demand. So if there's a lot of interest in the long end, we're not going to roll it out. We'll certainly take a look at it, but it will be based on pricing and appetite that we see. Okay. This is a good one for you, Rajashree. On the LCR, as the Head of Liquidity Risk, how do you get comfortable reducing our LCR? And is there a range that we're targeting?

I would start by saying we're not operating with a specific forward target in mind. That said, as the firm continues to execute on its growth strategy, in the medium term, we do think there'll be some opportunity to reduce the LCR, as it's currently quite strong at 127%. That is going to be totally contingent though on everything Beth mentioned previously in our presentation, the continued evolution of unsecured funding into deposits and the growth of more stable fee-based revenues at the firm. Through all of this, though, our conservative risk management philosophy at this firm is going to stay foundational, regardless of whatever changes we make in the margin.

Another one that we get quite often, and this one is from Scott Cavanagh, APG. David talked this morning about the importance of sustainability, can you give color on our appetite for issuing a green bond and what type of structure would we look at?

Yes. I mean, we have looked at that, and you all heard from David this morning, and there's actually a sustainability session in the next breakout around the $750 billion program that we announced most recently. So any issuance that we would do would also be tied to that broader sustainability focus, not specific to green bonds. We have been looking at it. We're quite interested. But it's important to us to take a best-in-class approach to these sorts of things, and we've never done it before. So we have to make sure that we're comfortable with the certification process, the ongoing monitoring and so forth. We benefit from the fact that our Investment Banking colleagues and our sustainable finance group are very active in this space. And so we get to see what they're doing for clients and take a look at that. There were 2 issuances that were done last year that we've looked at closely. One was for Pepsi. I think it was their third green bond that they had done. And their asset allocation framework was interesting. I mean, I think, the framework they use is fairly industry standard at this point, but that's something that we would look to emulate to sort of match the funding against the relevant assets. And then likewise, we did a similar transaction for Apple last year. The more -- the interesting thing with the Apple transaction was that they were very committed to financing, primarily new assets. And so that would be something else that we would look to emulate.

So that's a lot of thinking on it. Anything to announce here?

No, not yet. We're obviously looking at it, but -- and we want to participate, but we're not quite ready.

Rajashree, maybe, you'll take this on. Do you think LIBOR is really going to go away as soon as 2021? And is SOFR a viable option?

I get that question. We do believe LIBOR is going to go away end of 2021. And we are committed to a seamless transition, as Beth mentioned, for our clients, the firm and the marketplace. We have been working globally with central banks, the various regulators and the planning agencies on this topic. And again, as we have talked about, we're internally working on transitioning our own risks away from LIBOR, but we're also committed to providing liquidity to the SOFR marketplace as it develops.

Yes. And I think the other thing that's important to note, which you did, is that this is a global transition. And so while we're focused on the U.S. at 2021, the different markets are moving at different paces. So the U.K. is much further ahead. Other parts still to come further. Potential M&A. Given the benefit that deposits will bring to your competitive position, are you looking into acquiring another bank?

I'll take that one. Yes. So look, the GE transaction in 2015 was a very interesting one for us. It was -- we had the opportunity there to acquire a platform and people and deposits without paying a deposit premium. And the other thing about that transaction is that those deposits were sort of free and clear of any assets. They weren't funding anything on the GE side. They weren't needed anymore. And so that sort of transaction doesn't come along every day. We certainly would love to see another one. It was a great transaction for us. But as -- we've evolved a lot since then. And we now, with the growth in wealth and the Consumer business and the build-out in transaction banking, we basically have the 3 big channels: wealth; retail; and institutional deposits, sort of, available to us with our own platforms. And so I think our capabilities there are quite strong, and we have sort of lots of room to grow. It's a very big market.

If you're focused on remixing into deposits, is there any reason why secured funding grew more than deposits in 2019? And should this continue? Rajashree, do you want to take this one?

Sure. I would say we think about secured funding in really 2 buckets: one, our repo desk funding, our GCLA assets and facilitating client activity; and two, is our more structural secured funding, which funds our non-GCLA assets. When we look at what's happened over 2019, because of the increased client activity, it's really our GCLA secured funding that's actually grown during this period. I think that said, though, we do think secured funding is a great funding channel for us, and we will continue to use it, both for our own assets and for facilitating client activity.

Yes. And it's important to note that we have a pretty long WAM on our secured funding, greater than 120 days.

That's right.

Okay. This looks like a follow-up to the merger question, the M&A session. Now that you've expanded into Marcus in the U.K., are there other markets that you're considering? And do you envision expanding your lending outside the U.S.?

So I guess, the retail deposit specifically, right? So we are focused on growing our retail footprint in the U.S. and in the U.K. We're not looking specifically at expanding internationally today. I would note that the transaction banking business, while it's going to be a U.S. customer base, sort of, corporate customer base to start with, many of those clients will be multinational corporations. And so that will be more global in nature. On the lending side, I would say that we're pretty focused on the U.S. for now. We would see -- look at opportunities as they come up, either for product expansion or partnerships and so forth. But we have a lot on our plate. We have an aggressive, ambitious road map ahead.

Yes. And I think it's important to note that given the rate outlook internationally, Europe and Japan are not particularly attractive deposit markets.

Exactly.

Okay. On the capital issuance. How are you thinking about capital issuance in 2020? Do you have any preferred or subdebt needs on the horizon? And do you have the CCAR approval required? So we think about our capital needs very dynamically, and we'll continue to evaluate where we have capacity and where we can do more based on the evolving rule set as it comes out. As you know, we're still waiting on a final SCB rule, and we're hopeful that we'll get some guidance that will help make parts of that -- implement it into the 2020 CCAR cycle. But at this point, we don't have any particular details on what that's going to look like. I would say that we have looked at the preferred stock market, and we do have a number of issues out there that are callable. So where we have the opportunity to call and replace, we've done that and we've done that now 3 times over the past year, cleaning up our Series L, which we finished off last week. But we'll continue to look at those opportunities as they come up based on that. And then, okay, here's another one on capital, from Kevin Maloney. Preferred debt remains above the regulatory needs, but it helps on CCAR, will it be optimized? And, again, we'll look at this in the context of what the rule set is. Based on what we know right now, we feel like we're in a good position relative to that capital. But again, if some of the changes that [ Carey ] has talked about, are implemented for this cycle, there could be opportunities to adjust. And I think as you heard about this morning, we'll continue to be dynamic and make sure we're doing the right thing for our shareholders to either put that capital to work in the businesses or to return it. On resolution. How are you thinking about resolution planning constraints and is it binding for you?

I would start off by noting that we had no shortcomings in our last resolution plan. When these resolution metrics were first introduced, we actually spent a considerable amount of time in building it into our business as usual metrics, and that includes all of our platforms, our models and tools. Because of that, today, it's really just part of our day-to-day of managing across multiple metrics and constraints and optimizing across businesses and entities.

Carey, this one's for you. As CEO of the bank, how are you thinking about the credit quality of your existing loans? And what's your credit outlook for 2020?

Sure. And there's a lot of things you can say on that. So I guess, I would start by reminding you all. So 80% of our HFI loans are in our bank entities, and we are focused on growing the banks, but we need to do that in a prudent way, right? The safety and soundness of our bank entities is extremely important to us. And it's something we've got to get right. I've spent 14 years in our credit department before joining the bank. I was the bank analyst. I think about the credit quality of a bank quite a bit in my day-to-day job. And so with the loan portfolio in the U.S. Bank in 2019, across-the-board, we have a fairly diversified portfolio. On the institutional side, I would say, it's pretty well-structured and highly secured. Some of those businesses, the 2 largest businesses, for example, are in our Private Bank and in our fixed financing business. Those, in particular, are very highly secured with modest LTVs. So we feel pretty good about them. The net charge-offs for the portfolio, overall, for 2019, were 52 basis points. And so we're feeling really good about that. On the Consumer side, which is newer, obviously, those loans are unsecured and so we'll have a higher loss content associated with them. If I exclude Apple Card, because it's just so new and the loan portfolio isn't yet seasoned, the charge-offs for 2019 were 420 basis points. And so we think we feel good about the credit quality as it exists today and the underwriting process that we have and we're really focused with our risk colleagues on sort of anticipating risks in the portfolio and doing recession and scenario planning and so forth.

Any outlook for 2020? Any views on that?

I mean you can ask our risk colleagues in the next session, but I think the expectation is that there won't be a recession, but that doesn't mean that we don't spend time making sure that we're prepared for it.

Okay. And this is another one that I got at lunch as well and from Kabir at JP Morgan. Won't your Internet source deposits be more flighting in stress. What gives you confidence in your deposit franchise?

I would start by going back to something I had mentioned before, which is that our Marcus online direct retail deposits are more than 90% insured. When we have gone back and looked at historical data of how deposits have performed in stress, in short deposits have actually performed quite well. In fact, they have been quite sticky. All of that said, though, being risk managers, we do realize that a lot of the data we're looking at are not of those of online deposits. And therefore, we do internally have a conservative overlay to ensure that we're thinking about that risk correctly. I would also say that we continue, as I mentioned before, to focus on enhancing our client relationships by introducing new product features to continue to enhance the stickiness of our deposits.

Can I just add one thing to that? I think it was a credit-sensitive sort of a question, but there's also a rate sensitivity to it that comes up as well and came up at my lunch table. I think I would just note that in our retail business, we're really focused on our pricing strategy, right? Not being the top of the market to attract those -- the very rate-sensitive deposits. We understand we're offering the customer a sort of a package of things, right? The offering, the simplicity of our platform, but also other products and services over time. But the rate strategy matters quite a bit. And after the recent lowering of rates by the Fed, we did lower our rate pretty quickly. And so it would give us a good opportunity to sort of test and learn and see what -- look at the data and see what happened in the portfolio.

Yes. I mean, our strategy has been to be competitive but not top of the table.

Exactly.

So I think that pretty much bears about. Okay. So I think we have time for one last question. And this one's on interest rate sensitivity. So maybe I'll take it. Given where we are in the rate cycle, how are you thinking about your positioning? So despite the fact that our fixed income session was planned for the same time as the Fed's press conference, we do spend a lot of time thinking about interest rate movements and how -- where we are in the cycle or...

There are people monitoring that.

But it's important to note that despite the fact that we do manage the firm's interest rate risk, the bigger driver for the firm of the interest rate -- of our businesses is going to be based on the overall shape of the economy and how that impacts our core businesses, be it in Global Markets and turnover volumes and franchise activity or in our investment bank in terms of the client connectivity and activity through there. That said, I did see that the Fed raised the IOER by 5 basis points at the meeting, which we think is constructive for keeping rates well within the band. But it does seem like we're in a benign part of the rate cycle. I'm sure our risk colleagues will talk more about the coronavirus and what impacts that might have. But obviously, we're paying close attention to all these developments to help position the firm accordingly. Okay. So I think we are fresh out of time. So thank you all very much for joining us for this session. And we're going to be around to answer more questions. We'll be at the cocktails at 4. Hopefully, you guys will join us for that. In the meantime, we're going to have a brief break, while they reset the stage for our risk colleagues. And you're welcome to stay here for that session or go across the hallway for the sustainability one. So thanks very much. [Break]

Well, good afternoon, everyone. Welcome to this future of market structure breakout session. So my name is Ezra Nahum. I'm responsible for engineering and operations for Global Markets.

My name's Liz Martin, I run our Electronic Trading business and Equities globally in our European market making business.

Amy Hong, I'm responsible for Market Structure Strategy for Global Markets.

So listen, we've come a long way since I started my career in financial services about 20 years ago. So we used to communicate by sending each other e-mails from our desktop and leaving each other voice mails. We moved on to Blackberrys. And now we're using our wearable devices. We also used to see files and data to floppy disks and moved on to CDs, USB keys and now all that information is on the cloud. The market structural developments bring the markets to adapt to the new paradigm and inspire innovation. That innovation, in turn, evolves the market structure. What we're going to do in this session is really mostly follow-up on the Global Markets presentation you've seen this morning, focusing on what we believe are the major catalysts that are driving the market structure evolution. And in doing so, I'll try to highlight really 2 things: one, how we continue to invest to best serve our clients; and two, how we prepare for the market structure of tomorrow and thus remain the market-leading liquidity provider that we are today. But we're going to leave some time for Q&A at the end. You can submit your questions to [email protected], as you can see up here or through the Investor Day app throughout the entire session. So what are those catalysts? So we've identified 3 major catalysts that are driving the global market structure evolution. First of all, the increased regulatory environment; second, the technological developments; and third, the changing investing landscape. So let's start with the regulatory environment. The markets are more global than ever before. They're also more regulated than ever before. This has resulted in a material reduction in systemic risk as well as a large increase in transparency. In addition to that, the world markets are more complicated for all of its participants. So here on this slide, we've decided to show you the pre- to post-trade workflow of an interest, right, vanilla swap trade between Goldman Sachs and a Hong Kong-based client. So the point is, I'm not going to take you through every single box. Everything is written on it. But at least from looking at this slide, you should get a sense of the compliance complexity and the reporting requirements as well as all of the parties from trading venues to clearinghouses to multiple legal entities, that are involved and necessary to achieve such a successful transaction of this kind. To put a few numbers to it, there's about 13 regulatory regimes that are affecting this particular vanilla swap trade. We execute about 500 of those on a daily basis. So that's 6,500 regulatory checks per day, and we are not even counting the more complex trades that we do, even in that -- just that asset class. Now in order to tackle this complexity on behalf of our clients, and then provide them with a simple and seamless experience, first, we need to be very efficient. But more importantly, we need to build scale. Now we're one of very few institutions who have the ability to navigate this market structure, and we do so through technological innovation as well as technological implementation. So that leads us naturally to our second catalyst, the technological developments. We've essentially seen 2 parallel developments over the last decade-plus. First of all, an exponential increase in the availability of data, especially that of market data. And a very, very large improvement in trading speed and execution performance. So I'll start with data first. It's become critical for market makers, such as ourselves, to be able to harness large amounts of data in real time. That means we had to build a robust and scalable data infrastructure and ours is centered around a logical data model that's called PURE. [ We recently open-sourced ] a data model through our Alloy platform. Now as far as execution, performance and trading speed, Liz and Amy will give you specific examples in the businesses that they cover. I'll just mention one that I'm recently familiar with, which has to do with the high-touch client flow. You know, I mentioned that we moved on from floppy disks to the cloud, while the execution workflow for high-touch clients is also dramatically changed. We used to require a client to call up or send an e-mail to a salesperson with a request for a quote. That salesperson would actually load up their spreadsheet, pricing system, put in all the fields, communicate somehow with their trader or by e-mail, shouting. Trader, will look at the market environment, call their pricing functions, come up with a price, get back to the salesperson, reconcile what they had and then get back to the client. That would take a few minutes, sometimes even more, depending on the complexity of the transaction. That workflow is completely changed. Now a client can IM or send an instant message to Goldman Sachs, and type something [ that can rectify wide ] swap, meaning they want to receive fixed on the 5-year swap. That is automatically passed to our natural language processing engine that's absorbed into our pricing system. It can hit the trader's desktop if a human is necessary to actually price the trade or it can literally hit the systematic market-making engine and then the price is returned instantaneously. We process more than 1,500 RFQs like this per day. Now of course, this evolution in technology has led to a reasonably large increase in operational risk. We're constantly focusing on mitigating that risk, while doing so by implementing policies and, more importantly, controls around it. So now onto our third and final catalyst, the changing mix of market participants. As you probably know, there's been a tremendous growth in passive assets across all markets, approximately 17%, both in equity and fixed income since 2013 in annual growth, that's leading us to $10.7 trillion in passive funds globally approximately today. That's a little bit more than 35% of total assets. So if you take into account this trend and the continued consolidation, which is due to both the regulatory complexity and the technological developments, we just mentioned, it looks like the markets are growing increasingly homogeneous, and in doing so, create the potential for procyclical ramifications. Now also, this growth in passive funds is leading to less frequent trading activity. What that means for market makers is that they actually have to extend beyond just providing liquidity and market access to clients. They have to try and solve clients problems with respect to them becoming more cost efficient. To do that, we have to provide additional services. And we do so through our risk-as-a-service, data-as-a-service offering to our [ market ] platform, both digitally and through APIs. We're also exploring other services that can help our clients outsource some of their most costly functions to us. So we expect the markets to continue to evolve and to grow more complicated and for margins to end up compressing further. But that should mean a higher barrier of entry that we have today. And therefore, should continue to reward the wholesale participants with the scale to thrive and capture a larger piece of the available wallet. And that, therefore, is positioning us extremely well to continue to be a market-leading liquidity and market access provider. Now historically, we've excelled in the risk intermediation of large and complex transactions. And thankfully, we still do. But over the last few years, we've made a lot of investments, especially in engineering, to adapt to the market structure evolution. And in doing so we've been focusing on handling increased complexity on behalf of our clients and providing them a simple and seamless experience from pre to post-trade and across the entire spectrum of global markets, that means including the more liquid [ fueled ] businesses, as well as growing our financing footprint. And with this, I will turn it to Liz and Amy, who will take you through a deep dive in their respective businesses.

Sure. Thanks, Ezra. So I'm going to talk a little bit about equities. So we've talked a bit earlier today about the investment we're making in our equities trading platform. And the way that we've really approached it is, we've tried to put the needs of our clients in the center of all our investment decisions. And so we think about what they need today, what they're going to need in the future. And then we've been using that as a compass to really decide how we should invest in sequence that builds [ the ] trading platform. Now the goal here is to be unlocking value for them throughout our actual deliveries as opposed to at the very end of the journey. So in addition to trends like automation, regulation and consolidation that Ezra mentioned, there's a few trends in equities that are also really helping guide our investment strategy. So the first one is our clients have very advanced abilities to measure execution quality these days. And by that, I mean, the all-in cost of their trading. And it's driven by 2 things. So the first thing is, particularly in equities and stock trading, you have an enormous amount of data. Stocks tick around the world every single day, every minute of the day. When I look at our U.S. equities trading platform, and it very routinely processes, 5 million to 6 million market data updates a second. And so if you pair all that data with really advanced ways to perform data analysis our clients now have very, very precise ways to measure which broker is actually delivering them, the lowest all-in cost of execution. And by that, they're moving beyond commissions and beyond the spread and actually starting to even think about the post-trade impact of which broker they're transacting with, and it's directly driving who they trade with. Now the other thing is our clients really are trying to deploy their alpha more globally. And when they do that, they often trade in swap format as opposed to cash format. It's particularly important in the systematic client community. And so while the wallet and equities is definitely shifting more electronic, the systematic wallet, or certain wallets and equities, have more than doubled. So in Jim and Ashok's presentation on Global Markets, they mentioned that the systematic wallet has doubled to $3.6 billion since 2012. And more than half of that wallet is actually outside the U.S., which are traditionally swap or synthetic trade markets. And so the punchline here is, as we're building, we need to deliver superior execution quality across a wide range of global markets. We need to be able to do it in swap format, cash format, and we need to do it with a very, very seamless experience for that. And so another good news is as we're investing here is that in traditional voice trading often, our clients will deal with many, many partners, 20 different people that they might call if they're looking for a different risk price. But when they're hooking up to you in an execution capacity or electronic capacity, they're going to deal with a handful of partners. And so our job is to be the essential partner for them. And so in response, we've been replatforming all the way through the trade life cycle from order entry to execution, booking, settlement, post-trade analysis. We've been uncompromising when it comes to the engineering standards. We're using the same technologies that on-exchange market makers would use. Our goal here is to level the playing field for our clients and other market participants. In many cases, we brought in leading experts in this space. They've joined our teams. They've grown our teams. We're tackling 50 markets globally, a little bit more than 50 globally, the ones that are in highest demand for our quant and passive clients. Our clients need speed, they need resiliency, and they need scale for sure. But they also need a lot of customization. They need our platform to be flexible for the changing ways that they trade or the unique ways that their institution trades. They also care a lot about the front-to-back experience. And so we've actually taken the same technologies and the same experts, and we've extended the platform, not just across prime and trading and execution, but actually into our operations platform and really reimagined the level of service that we can deliver our clients from a post-trade perspective as well. So we've been at it for a few years, and we're really confident that using our clients as a compass has delivered results. A few things that we look at: our global stock trading platform, the strategic one, is processing 5 billion transactions a day at 300,000x faster than the blink of an eye. And so for some perspective, that's about 60x what Amazon processes on prime day, just kind of fun to say, now that Marco is here. Our strategic ops platform is demonstrating 99.9% straight-through processing rates, on big -- and actually even on days of high stress, it exceeds 99%. That exceeds our goal, when we started, we had set a 99.5% target for us. And then 10 years ago on today's volumes, we would have expected that to be about 60% straight-through processing. And Richard mentioned the international presentation that we started early in Europe, and over the past few years, our market shares have more than doubled in the execution space. But what's even more exciting there is actually across equities, our ranks with clients have never been higher. And so it is a multiyear build. But today, the foundations of this trading platform are in all 3 regions. We're going to be growing volumes across emerging and developed markets throughout the year. And Amy, I'll hand it over to you.

Great. Thanks, Liz. In contrast to equities, the fixed income markets are at varying stages of evolution. You've markets like futures as well as spot [ effects ], which are highly electronic, higher in speed, lower in latency. And at the opposite end of the spectrum, you also have OTC cash fixed income, like corporate bonds. As we drive forward, we're investing in tech, talent as well as our risk management capabilities to best service our clients' needs. Let's take a deep dive into credit where we've been pioneering a new market structure, where we offer our clients pretrade transparency, ease of execution, access to liquidity as well as workflow efficiencies. Starting with the left-hand side of the slide that's up currently, we have something that we call our bond pricing engine or our BPE, which generates live ticking mids across 32,000 corporate bonds globally. Now this is different from the still-dominant market paradigm, where pricing of bonds is manual and levels are only as good as the last time a trader marked his or her book. The universe that is covered by the bond pricing engine as well as the reliability of its mids continue to expand as well as improve every single day. We've made some significant strides. We had only 4,000 reliable bond pricing engine mids in 2015. And by the way, those mids were very frequently overwritten by our traders throughout the course of a trading day. Today, we're at 32,000 mids, and the bond pricing engine generates over 6 million updates per trading day. The BPE underpins our risk management as well as pricing functions, for not only small lots, but also block risk transfer. It even ticks mids for dollar, investment-grade corporate bonds overnight for our Asian client base. Now for a subset of funds that are priced by the bond pricing engine, we provide liquidity to our clients entirely systematically. GS Algo or GSA, as we call it, makes markets in over 15,000 corporate bonds globally. It systematically looks at current as well as anticipated liquidity, whether or not we have an existing position and estimates capital charges, among other things to generate a bid and an offer that wraps around the bond pricing engine mid. And all of this is done without human touch. The Algo handles client inquiries up to 2.5 million in size globally. It prices over 10,000 client inquiries per day, and it accounts for over 80% of our executed trades by ticket. Just to draw some parallels here, the U.S. investment-grade corporate bond trading desk executed fewer than 400 trades per day before the Algo. Today, it executes over 2,000 trades per day. And these numbers will continue to grow as we scale. And with the Algo, we are #1 in U.S. investment-grade corporate bond electronic trading. The combination of our bond pricing engine, Algo and trading talent underpin our successes in more recent developments. Our ability to price bonds systematically joined with our large and diverse bond inventory fuels our bond ETF market-making franchise, which has been market-leading since 2016. And the portfolio optimization that we built for our ETF business catalyzed the innovations that we brought to portfolio trades. Now it's probably worth detailing portfolio trading here. Portfolio trading, not new, but our approach has pushed the envelope. We are able to price large and complex portfolios of bonds in minutes as opposed to what used to be hours. And beyond simply pricing portfolios, we are also offering clients access to our proprietary portfolio optimization tools to improve their execution quality and their returns. Earlier in the Global Markets presentation, you saw that we've executed over $120 billion in portfolio trades since we modernized how clients trade bonds. We remain market-leading in volumes. This was a clear-cut instance where we led industry change, garnered client adoption, and we have come out on top in the new market paradigm. Now tying our systematic developments back to our digital strategy, we are making the bond pricing engine as well as Goldman liquidity for bonds available to our clients through Marquee via API on screens. Our successes today are the result of many years of R&D and investments paired with our risk management aptitude, which is at the heart of our DNA. We are operating at scale, and we're looking to enhance our competitive position even further. Having looked under the hood, you can see it's quite complicated. But for our clients, we like to simplify their experience when they're dealing with Goldman. Electronic voice, we're channel agnostic, and we're exclusively focused on client ease of access. For example, our Marquee APIs can connect directly into our clients' native environments like their order or execution management systems or into multilateral venues or bespoke ports. Client service is at the heart of our decision-making process. And beyond simple risk intermediation, we are creating solutions for and with our clients. Now in our allotted time, we've only had -- we've only been able to review the nuts and bolts of our credit business where the pace of change has been the fastest, but we have parallel efforts across all flow markets, where we are able to leverage technology to offer our clients better services. In rates, for example, we are focused on expanding the breadth as well as depth of liquidity that we are offering to our clients available at the touch and in FX as well as commodities markets, we've heard our clients loud and clear that the markets are fragmented and can be challenging to navigate. And so we are delivering to them a solution within the Marquee umbrella called [ ERM ] through which we are streamlining access to Goldman liquidity or Algos as well as broader market access through a digital experience.

Liz and Amy, thank you very much for that. So before we move on to the Q&A part of the session. I'll start with a question for the 2 of you. So from everything we discussed the perception out there is that this market structure evolution is driving transparency and compressing margins further. We talked about it earlier. So can you take some time to walk us through the future economics of the opportunities that you see in front of us, prospectively, in your businesses? Why they should be attractive to our shareholders and how in, prospective, in your cases, you think we will continue to be a leading market liquidity provider?

Sure. I can start. So look, I mean, the perceptions are the realities in many cases. However, the way in which we're making money is also changing, and equity is a $40 billion wallet, it's still a very sizable wallet when there's areas where we have room to grow. And so what's important is that our strategy is successful while acknowledging the realities in which we operate. And so what that looks like is having a best-in-class platform and then really leaning on our unique value propositions to our clients. And there are many, but I will talk about a few. So the first one is, our clients' requirements are global, and they're very often on swap format. And so the bundle of execution and financing is incredibly important. And we're in a really good position to deliver that. Based also on the strength of our prime financing franchise. And so while there are wallets within equities that are contracting, there's also some that are growing. Swap commissions are actually up across the industry at 13% over the past 4 years. And when a client executes on swap with you, they typically will often finance with you as well. And the financing revenues there can be 3x or more what the actual swap commissions are. So another important one in terms of value propositions are -- is securities lending. So our clients need access to securities lending globally, particularly to short stocks and market neutral books. And so based on our global footprint and also our diversified client base where we are very uniquely suited to particularly offer harder inventory [ growth ] to them. And that matters in places like the Middle East, that matters in places like China, which are markets that our clients are moving into. For example, last year, in Saudi, we were the leading broker and traded north of 30% of the MSCI inclusion events. And then the third one, we discussed that our clients really care about cost efficiency and have -- and dealing with the broker that's delivering the lowest all-in cost of trading. And so one of the most valuable things that we can do in order to insulate them from market impact is actually utilize our own balance sheet. Ashok talked in the Global Markets presentation about the fact that in equities, we had delivered over $2 trillion of liquidity to our clients through our risk intermediation businesses. I'm assuming most people would think that, that was definitely from our expertise in block and bespoke transactions, but actually $250 billion of that liquidity came through clients that were trading in our single stock Algos, 200 shares at a time. And when they did that, and they used those Algos, we generated $175 million in price improvement for them. And so it's a huge driver of value back to our clients and creates a virtuous cycle of increased market share. And as our franchise grows, we're recycling the benefits of that scale back to our clients, while also increasing our own operating leverage, which is a really powerful ecosystem. Another good example is trading on exchange. It costs twice as much to trade on an exchange for a subscale provider as it does for a wholesale provider like us. And so it's hard to think that niche players will really be able to deliver that ecosystem to our clients, which is very beneficial for our share. Amy?

Yes, I would say the fixed story is quite similar. Simply speaking, clients seek access to global markets. They want ease of execution across not only cash, but also derivatives, and they want access to financing. And so as the FICC markets continue to evolve, we will continue to invest to be the leading one-stop shop of choice for our clients across all of their needs. Just to share a few examples where our scale and our differentiated approach will help us continue to retain edge. I really like how you said it Liz, recycle benefits of our scale back to our clients. And we have so many instances where things that we're doing in one part of the business actually give us leverage to do new and different things for clients in another part of the business. And so one very specific example that comes to mind is, you've heard about FICC financing as one of our core priorities for Global Markets. You've also heard a lot about Marquee, which has been shared, for the most part, as our client-facing digital storefront. What's really interesting here is, as we build out our own FICC infrastructure for financing purposes, we're actually leveraging Marquee as the backbone that underpins our internal repo build out. And so that's an example where we are recycling one set of capabilities in order to further enhance another set of the capabilities. You've also heard a lot about our front-to-back alignment where we are aligning our engineers, sales and trading much more closely together in order to engage in agile R&D. Through tight coordination between engineering, sales and trading, we've developed a market-leading trade and risk system for the full suite of FICC macro derivatives complete with natural language processing as well as automated pricing. In the innovation presentation today, Stephanie and Marco cited that the pace of innovation in the markets requires a dynamic approach. We are practicing this and as a result, we're learning and driving progress every single day. Lastly, I feel like we've talked a lot about our own proprietary developments. But again, pointing back to the innovation presentation. Stephanie said that we have an emphasis on contemplating all of buy, build, partner and invest as we look at growth opportunities. I'd like to take a second to also mention just how important we think partnership is for Global Markets. We are partnering with market structure influencers across the board to drive change and create value beyond what we can do by ourselves. And so we recently launched the Global Markets strategic partnerships program through which we are looking to drive holistic engagement with market structure influencers. And our goal here is to grow with our partners. By investing to simplify market access for our clients with a differentiated approach, we will continue to capture share. Great. Thank you. So I think we should move onto Q&A. So let's see what we see on the screen.

Yes, and just as a quick reminder, please do submit questions.

So what we're seeing here.

Yes. Why don't we take the one on talent. It looks like there's actually a couple. So it's competition for talent impact to head count. Ezra, do you want to answer that?

Yes, I'll start, and I'll focus on the engineering technology part of the talent pool. I think, clearly, there's been a big shift in the skill set, that's needed. When I got hired, I have a PhD in Statistic [indiscernible] and that's what people were looking for. And the competition was only with like the traditional competitors. The other banks took price complex derivatives, essentially. That's completely changed now. We're looking for very strong programmers and great data scientists. It turns out that, that's also what the big technology companies are looking for. So maybe I tell you, we think we're being successful at still attracting the best talent [ and that, sure ], despite this larger competition, the idea is, we allow those people to get access to the Global Markets to interact with salespeople, with traders, with operations professionals, with bankers. They basically get exposed to a completely different new world that the technology companies don't necessarily allow them to be exposed to. And so, so far, we've been reasonably successful and continuing to attract the best talent with a completely new set of skill sets that were needed. I don't know if there's any -- Amy, you want to add anything to that question in respect to what you see in your businesses?

I mean, one of the things that I'd add is that the way in which we cover our clients is changing. Marco mentioned in his presentation that the developers are often the client, and we completely see that in a business like ours. And so often now, when we're going, and we're talking to a client, we're walking into a room and it's our engineer talking to their engineer our quant talking to their quant in explaining a model. And so it does 2 things that are kind of cool. I mean, one is it really allows us to bring the best of Goldman Sachs and showcases to our clients. And so we talk a lot about platforms. And building platforms in platforms. But the reality is the people build the platforms. And we do have really good people doing that and being able to put them on display to our clients has really given us an extension of our sales force. But I also think it makes the job cooler. It actually just makes -- when I think about the job for a minute, many of our engineers, a handful of years ago versus now being able to drive the business and be part of those outcomes and really be an extension or a distribution force, I actually think leads to retention of talent.

I also think -- I think the questions were geared towards engineering talent. But I think we'd be remiss not to discuss sales and trading as well as operations talent. As we've automated many of the time intensive, lower value aspects of our day-to-day, I think that the sales trading as well as operation seats are much more exciting today than ever before. And frankly, they are -- our people are able to drive much more in the way of client value and differentiated services as a result.

So it's a good point. So let's see...

I know. We're actually running out of time. So...

Yes. We've probably time for a couple more? Yes, yes. So where we see there. The -- yes, there's one on how scale and efficiency efforts form automation impacting expense savings. So I'll give that one a go. You've seen some talk about the expense savings from Global Markets. And you've heard about front-to-back. I mean, it's been talked about. Amy just mentioned it. So yes, about 1.5 years ago, we started this process of bringing the engineering professionals and operations professionals that were dedicated to Global Markets inside the division, so essentially made them part of the overall Global Markets business. The idea initially was to really understand the services that we're offering to our clients front-to-back. So from pre to post-trade across the entire life cycle. When we started this effort, with my co-heads about 1.5 years ago, we started looking at, well, how much do they cost us, all these different services? But we didn't stop there. So sure, we started coming up with an idea of how much savings we could generate over a 3-year period. And I can tell you, it's about 1/3 of the number that you've seen for Global Markets overall. But we also looked at the feedback we're getting from clients with respect to how satisfied they were with the different services. And so I think it's very important when we talk about expense savings here to highlight the point that it's not just about saving and being more efficient, as we're becoming more efficient, we'll provide better client service. So the idea is to do both at the same time. And so we think that we're on the right track, while we're focusing on becoming more cost-efficient to actually deliver a much better quality of service to our clients, which, I think, Liz in your business, you've seen the results of that.

Yes. I mean, our clients actually measure the value that we are creating by automating our services across the whole trade life cycle. So often your clients measure your performance in things like execution, but also increasingly in things like post trade. I mean, we have things called broker scorecards and a handful of years ago they'd look at things like corporate access or access to research analysts. But now increasingly, for a lot of our bigger clients, they use -- they actually include a lot of operational metrics. They'll look at things like timeliness of confirms, or straight-through process rates, or number of incidents in your operations stack. And so as we improve that, our rankings and our performance with our clients improve and actually then we become a bigger broker of choice for them. So they're completely measuring us.

Yes, absolutely. So okay, one last one. There's one for you Amy right there. How will you monetize investments like Marquee and other services or APIs?

Yes, sure. That's a good one. So just taking a quick step back. We have a few things that I think are really important to point out in the context of Marquee. First and foremost, we are not encumbered by a monolithic legacy digital client offering. And so we're able to build something that is suited to our clients' needs today. We also have very strong businesses across Global Markets, which give us a clearer line of sight into what our clients' needs are so that we can be client-centric in our approach as we continue to develop our Marquee platform. And lastly, I would say that we have the most robust and critical group of quality assurance testers within the 4 walls here at Goldman on our trading desk, which ensures that we're delivering quality products to our clients. On the question of monetization, I think there are really 2 ways that we look at it. There is implicit as well as explicit value when it comes to what we're doing with Marquee. The implicit side of the equation is quite obvious. We've got strong global businesses and Marquee will enable us to further fortify the services that we offer to our clients. And so I think that is pretty obvious to everybody. On the explicit side of the equation, as we deliver solutions, analytics, capabilities to our clients as well as our partners, that are of value, I think that, that part of the equation will solve itself. May I make a plug? If you have not already done so, please do visit the Marquee kiosk for a demo. It's just right outside of the auditorium. And the team is there and very excited to see you all.

Okay. Well, I think that concludes our breakout session. Thank you again for being here. And if you have any additional questions, we're happy to see you at the reception a little bit later.

Good afternoon. Thank you for being here. I really appreciate everybody sticking with us to this time of the day. It's been a long day, and you've heard a lot. So thanks for taking the time. Why don't we start with some introductions. My name is Brian Lee, and I'm the firm's Chief Risk Officer. I've been at the firm for over 25 years. Previously, I was Controller and Chief Accounting Officer, where amongst other things, I was responsible for overseeing the firm's CCAR process. Risk management has been integral to all of my leadership roles at the firm.

I'm Karen Seymour. I've been at the firm for 2 years as the General Counsel. Prior to that, I came with 30 years of experience, split between private practice and government service. And while I was in private practice, I did have an opportunity to work on several matters with the firm.

I'm Sarah Smith. I'm the Head of Compliance. I've had that role for 3 years. Prior to that, I was the Controller, Chief Accounting Officer of the firm, the one before Brian. And my prior experience is in the national and audit practices of a big 4.

My name is Sheara Fredman. I've been with Goldman Sachs for 17 years. I'm the current Chief Accounting Officer and Controller of the firm. And I would like to note that between Brian, Sarah and myself, we've signed every set of financial statements that Goldman Sachs has filed as a public company.

Thanks, Sheara. That reminds me a couple of things about the panel that I do want to highlight because it really struck me. One of it's diversity of perspective. So between Sheara, Sarah and myself, our average tenure, and I know you've been hearing about tenure all day, is 22 years each. So that certainly brings along with it a lot of history, a lot of knowledge of our culture. Karen also highlighted, though, she's fairly new to the firm. And I think the power of her bringing a different perspective to our conversations has been really impactful and meaningful to all of us as we debate in different issues. The second thing I wanted to highlight is as a risk management team, we've seen all elements of an economic cycle. We've seen strong growth, recession, financial crisis. And I can guarantee you those memories haven't faded, and they guide us in what we do. So before we get started, let me go through the format for this afternoon's session. First, we're going to go through a handful of slides covering our risk management approach, some of our key priorities as well as highlight how risk is integrated into our firm-wide strategy. Karen and Sarah will then spend a few minutes going through some enhancements that we've made post 1MDB. Then I will ask the panel some questions, the kinds of questions that we most regularly get from all of you and others. And then lastly, with the remaining time, we'll open it up to questions from the audience. So you can submit your questions through the Investor Day app or on the Investor Day e-mail, which is on the screen behind us. So why don't we get started with the slides because we do have a lot to cover. To have an effective risk management function, you need to have strong culture, strong processes and a commitment to continuous improvement. I'm proud to say that thanks to years of hard work, our risk management foundation is strong. And it is on top of that strong foundation that we have the confidence to actually execute our strategic initiatives that you have been hearing about throughout the day. Now to us, risk management is a lot more than just governance. Risk is a scarce resource that we consciously deploy to meet our customers' needs. The risk teams work closely with our businesses to determine appropriate risk limits that are consistent with our strategic goals. So let me spend a moment going through our risk management life cycle. You've seen this throughout the day through many presentations, and let's start with culture. So one of the things that we've always understood is that we're in the business of taking risk. Since we've embraced that notion, risk management has always been ingrained in our culture. So what are some of the differentiating features? Let me touch upon 2. First is a disciplined risk/reward approach, consciously knowing we're taking risk, pricing it appropriate to earn -- appropriately to earn an appropriate return is critical. Next is the importance of a deep bench of risk managers, whether it be market, credit, liquidity, operational or cyber risk, having a depth of expertise across the organization is also critical. So let me move on to our process and structure. There are many things about our process and structure that are notable. But first and foremost, we're proud to have an empowered and independent risk function. This starts at the very top with me reporting to David and to the Board, and it trickles down to our risk managers, who are independent of the business. We also leverage comprehensive stress testing as well as our mark-to-market discipline. We'll touch upon those in a little bit more detail as we work our way through the session. So and finally, we're always looking to improve the topics that we wanted to highlight today and discuss with you a little bit are -- include risk appetite, capital and prudential regulation, cybersecurity as well as reputational risk and compliance. Let's start with risk appetite. So you've probably heard it before, but if you ask a risk manager, what they're worried about, you're likely to get the candid answer that they're worried about everything. We actually have a process around it. We manage our risk appetite across the continuum from day in, day out business as usual risks to vanilla recession risks, to 1-in-100 year flood risks that we actually capitalize the firm against. We take a comprehensive approach with thousands and thousands of limits and numerous stress tests. The risk teams also spend time reviewing our strategic plans against our risk appetite, which I certainly have found leads to a virtuous circle of calibrating our appetite and our strategy, which, to me, has led to a more prudent and controlled growth when you go through that process. Let's spend a little bit more time on the continuum. So relative to the prior slide, we've now added the 3 broad classifications that I've mentioned. And we've also added some specific examples of limits and stress tests that we actually deploy. Let's start on the left with BAU. So here, we apply robust shocks against our current risks to ensure that our risk is within our appetite. For example, in our credit spread widening stress test, we doubled the current level of spreads. Next, we have our adverse stress tests. Those includes things like Brexit, trade war, oil shock, all relevant scenarios that we've run and have utilized over the last several months. They're intended to reflect severity from the very comprehensive economic scenarios that are consistent with vanilla recession that you would typically see over a 5- to 10-year economic cycle. As a result, they are a core component of our cycle preparedness discussions. The last category that we have on the slide are severely adverse scenarios. We evolve our severely adverse scenarios with the risk profile of the firm and the economy. As you're well aware, these scenarios are subject to intense prudential oversight via the CCAR process. What I'm actually fond of highlighting and saying is that it's these scenarios where risk and capital meet. So with that as a segue, why don't we briefly touch upon capital. Sheara, do you want to take this slide?

Sure. Happy to, Brian. Capital is a critical part of the firm's foundation and managing capital in order to achieve the targets that we've articulated to you over the course of the day today is of critical importance. The good news is the firm has a robust amount of capital, and we announced today a CET1 target between 13% and 13.5%. And arriving at that, we really had to balance both safety and soundness as well as ensuring that we had -- that we were able to deploy capital to meet client needs in line with the strategies that have been articulated over the course of the day today. What the time series behind me shows is really the earnings power of Goldman Sachs. Over our history, there have been instances where the amount of capital the firm has declines, sometimes even unexpectedly, whether as a result of the financial crisis or more recently, tax reform. And what you can see through the earnings power of the firm is we're able to rebuild that capital in relatively short order, which has proven historically to be an important skill. Another important skill that the firm has demonstrated through the lens of capital is adaptability. Over the course of the last 10 years, the capital landscape has evolved quite significantly, including CCAR, which, Brian, you referenced earlier, among many other things. And each time a new rule comes out, the firm's proven its ability to incorporate that rule and adapt to that rule and still continue to meet all the demands that our clients have. And that skill is going to continue to remain important as we await the stress capital buffer rule as well as the remaining components of the Basel III revisions.

Thanks, Sheara. All right. Why don't we switch gears and discuss cyber. We're keenly cognizant of the risks that we face from a cyber perspective in our existing franchises as well as our new businesses. We have a centralized team of security experts, led by our Chief Information Security Officer, Andy Ozment, who is actually here with us today, and I'm sure he'll be available for -- available to answer questions later on. We also have an expert second-line cyber risk team. And we're also fortunate to have Board expertise in Vice Admiral Jan Tighe, who previously was the Director of Naval Intelligence and also previously ran the naval cyber team. And our overall cyber program is consistent with industry standards. The way I would describe that as simply as possible is to break it into 2 components: defense actions and response and recovery actions. In defense, we take actions such as conducting penetration tests of critical applications. We maintain a bug bounty program, where highly skilled researchers search for vulnerabilities in our websites and mobile applications. We also share data with industry and government partners on emerging cyber threats. With regard to response and recovery, we take actions such as running tabletop exercises to ensure that we're prepared to actually respond to an incident. We invest in having the ability to recover applications in critical data post an incident. Now despite the rigor of our approach, like with all large companies, our inherent cybersecurity risk continues to increase. So we will continue to invest to enhance our processes. So now I'll pass it off to Karen and Sarah to discuss reputational risk and compliance, particularly in light of 1MDB.

Thanks, Brian. With respect to 1MDB, there's not a lot that I'm going to be able to share given the ongoing investigation, but I will say we are very focused on trying to resolve that matter as quickly as possible. But it's important to bear in mind that the transactions on 1MDB occurred more than 7 years ago. And since that time, there's been a lot of evolution, some of the change that you talked about, in terms of our control and risk framework. And so there's a lot of focus that we have on incidents, both at Goldman Sachs and incidents across the industry. And so we do try to evolve. But let me talk about some of the changes that I think are important as we think about things in protecting against issues for reputational risk. The first one is a real focus on transaction review. And with that, we have enhanced our processes in several ways. We have regional groups that do an early vetting of transactions and they are led by Managing Directors of legal and compliance, and they work to look at transactions in terms of reputational risk, maybe they're significant in size, maybe they're highly complex, maybe there are other indicia of reputational risk, and they are fully empowered to decline transactions early on. From there, Sarah and I, together with our Head of Conflicts, we review those transactions with the teams weekly. There's also an opportunity for further level of escalation to the firm-wide Reputational Risk Committee, of which Brian sits, Sarah and myself and our Head of Conflicts co-chairs. So those are sort of ways that we really focus and look at transactions. Now in addition to that, we've developed a reputational risk framework, which we use as a tool to help us focus on the indicia of reputational risk, and we use it for training firm-wide, so that our employees across the firm understand areas of reputational risk. And then the other thing I'll mention before turning over to Sarah, is the enhanced regional supervision framework that we have. Now Richard Gnodde, you heard from earlier, he oversees the regional international offices, and we have a structure for supervision so that it's enhanced, and we have clear embedding principles of our compliance culture throughout the entire regions. Let me turn to Sarah.

Thank you, Karen. So we should probably talk about employee conduct. As you can imagine, that's an area that we have spent a significant amount of time on in the past few years. It starts with making sure we have a very strong tone at the top. As you heard David say earlier today, integrity has been part of our core values at the firm for literally the last 150 years. But making sure that, that messaging is heard throughout the firm by every employee, that it's consistent, that it's embedded in our training, has been a real focus for us, including, by the way, training for very senior people at the firm, which we have, which is called our Chairman's Forum, and the last iteration of that actually focused specifically on transaction review and approval. Then we have an increased focus on conduct metrics. And here, we are ensuring that we are monitoring and tracking incidents around the firm, looking for patents, looking for ways that we can step in and have dynamic responses, such as training or communication of consequences of misconduct, which is very important. And those metrics and those trends are reported, not just to our senior management, but directly and regularly to the Board. So having those tailored responses and being able to make them very quickly is a result of those metrics. And then we combine that with very strong surveillance tools. So here, we've seen a real development over the past few years in what these sorts of tools can do. We have some that we've purchased externally. We have some that we have developed entirely internally. And these tools are very sophisticated. They can look for patents not just in employee communications, but in employee behaviors, and we deploy those across the firm every day. Another tool is our business integrity program, which is a whistle-blower program. And we have -- it's very well advertised in the firm. We've expanded it. It's well known. This has engaged the whole employee population in knowing that they can raise and escalate issues that are of concern to them from a conduct perspective. And they can do that either anonymously or not. They can raise it with a number of different -- within a number of different channels. And we've found that engaging our employees to help us in this effort has been really, really helpful. And one more program I want to talk about is our Insider Threat team. And this is very active within our firm. It's a group of people. It includes people with cyber technology experience, but importantly it includes a group of compliance officers with very specific skill sets. These are people that we have hired who were former prosecutors, former members of law enforcement, including the FBI, people from military intelligence agencies around the world. And we added them to our compliance programs. Their job is to look for ways to detect and prevent employee misconduct. And they are very, very good at what they do. So we've done a number of things in the last 7 years. I would say the ones that we've talked about here, including transaction approval, are some of the most important and impactful.

Great. Thank you, both. Why don't we pivot to asking a couple of questions?

So Sarah, why don't we start with you? How does compliance balance its mission of protecting the firm, considering all of the growth targets that we've heard about today?

So that's a constant focus, as you can imagine of the compliance division. I would just say, it does start with the fact that we have a very strong and independent function. I report directly to David as you do, Brian. I'm a member of the Management Committee of the firm and the Business Planning Committee. So that means that I'm very well aware and so the compliance team is very well aware of our short- and long-term initiatives and strategy. It's very important to note that for all the new businesses and, in fact, growth in our existing businesses, compliance and risk have a seat at the table, literally, from day 1. And just as an example, in the Apple Card recently, both legal and compliance presented to the business a very detailed list of specifications with everything from fair lending through to how the call centers were going to work, through everything else we needed, before a single line of code was written. Another example would be United Capital, which we bought earlier for the Wealth Management division board. The compliance team was in the due diligence and was in the post-integration process as well.

So there's no playing catch-up?

No. No playing catch-up. We are there from the beginning. And in fact, not only can no new business be started without the control functions being at the table, certainly, no business can be launched without our sign off.

For legal to exactly, as Sarah said, I mean, we're there with Apple Card, for example. We took the step to actually hire people who had credit card experience into the legal department well ahead of any launch so that we were right there with people with experience and knowledge to help guide the team.

Can you guys also spend a moment maybe describing how it works for our existing businesses?

Sure.

So from a compliance perspective, our compliance officers are literally involved every day with their businesses. They're often embedded with our colleagues. And just as an example, you heard earlier today from Jim and Ashok about the ongoing development of a new technology stack for our Equities franchise, our Compliance Officer sits on the steering committee that is building that new technology and to make sure that all the aspects that we would expect and the controls that we would expect are being considered, again, from day 1. And given that proximity in every business that we have, compliance is able to constantly reassess the skill sets that we need, a number of people that we need. And so just as an example, in our consumer compliance group, before the Apple Card was launched, we had all the experts we needed in-house on credit cards that we've not had previously, and we'd had several hundred people ready to go right before the launch.

Fantastic. All right. Sheara, why don't we switch gears and go to you. We've had a lot of conversation today about capital and about our CET1 targets. How do you get comfortable with the target considering how much the capital rules continue to change?

Sure. Good question, Brian. So starting with the targets that Stephen articulated in his presentation this morning and kind of breaking it to its components. We start with the 4.5% minimum and then we have a 3% GSIB surcharge and a 5% SCB. So starting with the GSIB surcharge of 3%, as I think most of the people here know. We've operated historically through the end of '19 in the 2.5% surcharge bucket. But we recognize in going through the work to arrive at the strategies that were articulated over the course of the day today, the need to grow the firm's balance sheet and other resources, which is going to cause the firm to increase its GSIB footprint from 2.5% to 3%. A lot of that is driven by the Global Markets business, in particular, within prime and repo, which, again, are pretty GSIB consumptive. From a stress capital buffer perspective, we are targeting a 5% SCB. That's informed by the current proposed rule, the most recent results, as well as the evolution of our balance sheet over the medium term. Now I would caution that, of course, it will ultimately be dependent upon both the Federal reserve scenario and their calculations that will determine the firm's stress capital buffer. But with that said, we have the ability to be proactive about it having been -- having participated in many CCAR stress tests over the last number of years. We can see what causes the firm's peak to trough losses. And so as an example, what was discussed today, specifically within Asset Management, is the shift that we're making in our alternatives business by moving some of our -- out of private equity and growth equity on balance sheet into funds and going into credit, where private equity and growth equity has really seen some of the larger shocks in CCAR over the last several years.

Thanks Sheara. Could you also maybe expand for everybody a little bit on how we've been thinking about a management buffer?

Sure. So again, they're difficult to do without a final rule. But based upon what we know right now, we think it's appropriate to size the capital buffer for the firm on top of the regulatory minimums at between 50 and 100 basis points. And the way in which we arrived at that was after extensive scenario analysis, looking at historical volatilities. And what we're really trying to do is make sure that the firm can operate above regulatory minimums, of course, but also be able to tolerate risk-weighted asset volatility, a onetime sizable loss and be able to, again, maintain above regulatory minimums. And so a lot of work went into thinking through that. But again, I would caution that it will be dependent upon what the final stress capital buffer rule looks like to determine the management buffer that we need to operate.

All right. One more for you Sheara. So earlier on when going through the slides, we were highlighting the importance of mark-to-market discipline to the firm. What an advantage it had historically been to us and really a core component of our overall risk management philosophy. With the growth in HFI loan portfolios, are you at all concerned that, that's being diminished?

Sure. So mark-to-market accounting is our most important accounting policy and one of our most important risk management tools. Substantially, all of our assets are carried at fair value currently. But your question is the right one, Brian, in that we've been growing the amount of loans on our balance sheet that are accounted for as held for investment or on an accrual basis, plus an allowance for loan losses. And again, in line with the strategies that have been articulated over the course of the day today, that balance is going to grow. The good news is we think mark-to-market or fair value is so important that without regard for how we account for the underlying instrument, we actually maintain fair valuations across all of the firm's assets and liabilities, because we think that it's important to know on a regular basis, what the market would pay for any of the firm's assets or liabilities. And again, I would reiterate, that's without regard for how we account for it. And that can often cause us to change how we think about the risk management of that position to the extent that the market price starts to move. On top of that, we actually have an independent group that works for me that independently verifies all of those asset and liability valuations to ensure that the firm's balance sheet is appropriately valued at any point in time.

So it doesn't impact our ability to be nimble?

No. Fortunately, the gap allows to the extent that your intent changes, that you can change the accounting. So to the extent that you've designated a position as held for investment, but you decide, and we may decide because we see through the fair value marks, what the instrument is worth, that we want to change our intent and hedge that position or sell that position. We can move it out of held for investment into held for sale and risk manage it appropriately.

Great. Thanks, Sheara. All right. So why don't we move on to the questions from the audience. Let's see what we have coming up on the screen. I guess, this shouldn't be a surprise. This must be an aggregation of a couple of questions, but what risks are top of mind? So, I guess that shouldn't be shocking. I think that's something that applies to all of us. I'll go first and give some thoughts. When going through the slides earlier, we were really focused on our risk management approach. We weren't necessarily focused on like what's ringing -- when the phone's ringing every day, what are the conversations about? What's consuming all of our time from a meeting's perspective? So I think I'll focus on a couple of those things. First and foremost, to no surprise, based off all the conversations we've had today is a keen focus on all of our strategic initiatives. Karen and Sarah were talking about those a little bit before. I could go on for a while about them, but probably the one thing I just want to reinforce is we fully recognize that we're taking a risk in these initiatives. Back to our slide on culture, that's where things begin, understanding we're in the business of taking risk. But an important thing is that if we believe the right thing to do, the prudent thing to do, is to slow down the growth of any of those initiatives, we will. We've done it before, and we'll do it again. So I think that's just an important point to get -- to reinforce without going in specific risk by risk. Second thing I would highlight that I spent a lot of time on is recession planning. So consistent with what you've been hearing, consistent with industry perspective, we don't think the risk of recession is high. With that said, I do believe one of the most important elements of a Chief Risk Officer's job is to ensure the organization is as prepared as possible for the next economic downturn. So I do spend a lot of time personally focused on that. And then the last thing I would just touch upon is climate. Now a lot of other conversations are happening around climate, but more from the perspective just that it's working its way into risk management discussions. It's working its way into our credit underwriting discussions. It's working its way into how we think about designing stress tests. And it's working its way into more recurring agenda items at our Risk Committees of the Board. Sarah, would you mind giving some thoughts?

Yes. So I would say that one of the things that is always top of mind is making sure that we meet all of our regulatory obligations around the globe. And that's a tremendous focus for us every day. Another one would be the Insider Threat considerations I mentioned earlier. And then with respect to our new businesses, they're bringing new challenges. So for example, in AML, we have -- these are businesses with very different volumes than we have seen in the past, consumer, transaction banking, the volumes are incrementally different. And so making sure that our infrastructures are ready for that, is something that we've spent a great deal of time on. And then just finally, I'd say, new businesses and growth bring new people to Goldman Sachs and so making sure that they know, as David highlighted today, there's a lot expected of people here. They know what that is. And in fact, with a lot of the senior hires that we bring in, we actually meet with them before they even step through the door and make sure that they are aware of what we expect from them.

I'll be brief because we're almost out of time. I would just say, in addition to the new businesses, I would say, Brexit is still going to happen. And so that brings legal risk, increased focus on privacy with new privacy legislation that we have to comply with. And then I would say the LIBOR transition, the last panel discussed it, but it's top of mind.

Sure. And I guess, to round it out and kind of in line with some of the questions you asked, Brian, capital planning at an institution like Goldman Sachs is quite complicated and doing it while the regulatory landscape is still evolving, compounds it. And we really think about it in -- through 2 lenses. The first is capital planning, and that's the extensive time that we spend myself with Stephen and ultimately up through the Board of Directors of the firm, on how we think about capitalizing the firm. And then importantly, the way in which we allocate and attribute that capital to the underlying segments, making sure that it's neither too much nor too little, is quite both an art and a science in order to do that, especially as the regulatory landscape continues to evolve. And then the second theme in which we look at it is really capital advocacy. And this is working very closely with our peers and other industry organizations, engaging with the regulators in dialogue, as they look to right finalize some of the rules that are coming down the landscape. And what we really focus on there is making sure that the regulators are looking at those rules cohesively, not finalizing one after the other after the other because you really have to think about capital in its totality. We also want to ensure that a particular product or asset class isn't overcapitalized relative to another. And that's all through the lens of making sure that to the extent that markets -- or products end up overcapitalized, the markets then don't function well. You start to lose liquidity. And so really making sure that, that is all done right and cohesively is about most importance for us as an institution, for the markets, in which we operate and ultimately for the economy.

Thank you all. So as Karen highlighted, we're running out of time. So I would just like to end where we began, which is just reinforcing that our risk management foundation is strong and it really does create a high degree of confidence for us to be able to execute upon the strategic plans that you've been hearing about today. So once again, thanks for taking the time and sticking with us here for the last session of the day. We look forward to actually spending time with all of you that can make it to the cocktail hour. And so to get to the cocktail hour, you can go out into the main lobby, take the elevators to the 11th floor, then take your first elevator bank to the 43rd floor. And once again, thank you all very much for your time.

I'm Asahi, Asahi Pompey. I'm humbled to serve as President of the Goldman Sachs Foundation and Global Head of Corporate Engagement.

Hi, I'm Margaret Anadu. I'm a partner in our Merchant Banking division, where I lead the urban investment group.

And I'm John Goldstein, and I lead our sustainable finance group.

So before we dive into our moderated discussion today, 2 things. One is we want to hear from you. So please send in your questions via the Investor Day app or via the e-mail address that's on the screen. As you know, we just celebrated our 150th anniversary. But that's backward looking. We're at the dawn of the next 150 years of Goldman Sachs. What do we stand for? What differentiates us? What's next for our firm? Have no doubt about it, we've been focused on sustainability for many years now and it will define this next era. We simply have to do our part to help tackle problems like climate change, economic inequality and the growing wealth gap. So what do you as investors need to know? 3 things. One, we're going all in, committing $750 billion over the next decade to further sustainable economic growth, consistent with our purpose. Two, we're investing deeply in communities. What's more, we're doing it in a way that's accretive to the bottom line. And Margaret's going to talk about this a little more -- a little bit more later. Three, you and I know that talent is everywhere. But all too often, opportunity is not. So we're deploying our philanthropic dollars with typical Goldman Sachs' rigor to provide more opportunities to more people in disadvantaged communities around the world. Now to level set, over the last decade across our entire philanthropic footprint, we've deployed $2.5 billion. So let's dive into this moderated discussion. John, I'm going to start with some rapid-fire questions for you.

Everyone across The Street's talking about sustainability. What differentiates Goldman Sachs' approach?

So I think there are 3 main things that are a little bit different. So I think size and scope of the commitment. The second thing is really where it comes from. And the third thing is what it means for our business. So the first one, the size part is sort of obvious. Right? $750 billion is a big number. The scope, I think, is also worth noting, it's these 2 pillars, inclusive growth and climate transition. So a little more holistic, I think, than some of our past efforts and I think what you see out there. However, the second thing is probably more important, which is really where it comes from. I think David Solomon, our CEO, articulated this really well in an Op-Ed he had in an FT, but this is really grounded in a view of the fact that there are these 2 secular growth themes that we think will increasingly play a significant role in the economy, in markets for our clients and for ourselves. And that's what really grounds us, a view of where the world is going, and it drives a certain natural response, which is the third point. This is not a separate initiative. It's not a fund. It's not a label. It's a core view that then grounds work really up and down throughout our business. And I think conversations I had with clients recently underscored this. I think the first I was talking to a CIO who said, "I sat down with my organization, I feel we've kind of lost the thread on ESG. We know we're supposed to do it, but we've lost track of why". We know why we're doing this, right? This core economic view grounded in years and years of research and a view of where things are going in the future. I think the second one -- it was a good question that was asked, "Is this ambitious? Or is this realistic?" And I maybe cheated, I said the answer is both, right? On the one hand, $750 billion is a large commitment. It's a big number. It's ambitious. On the other hand, if we've done our job well, if we've analyzed markets, had our forward-looking view, and we execute the way we need to, and we can, then it will turn out to be realistic.

So ambitious and realistic. What does this all look like in practice?

So in practice at the end of the day, what it really looks like is our business, right, across our different divisions. So think about within our investment bank and whether it's helping U.S. corporates tap the green bond market, people like Verizon, Pepsi, Apple or financial innovation, right? And whether it's something like the SDG-linked bond where the Italian utility are now -- raised capital based on its commitment to hit clean energy targets. We're the first-ever social sovereign bond for the government of Ecuador, that's going to help 24,000 families get access to affordable housing. Look at, for example, our Global Markets group. They see $10 trillion of investment going into clean energy, in the decades ahead. That needs to be financed, bought, sold, hedged, traded, there's a tremendous commercial opportunity in navigating that transition effectively with their core toolkit. Also, the research toolkit. Think about recent work on carbonomics, on gender, on physical climate risk, asset management, really running the spectrum. You heard this morning about large allocators and pension funds, working with things like low carbon indices or climate risk solutions at that side of the spectrum. Liquidity solutions for corporates, hedge funds and others that want their cash managed in alignment with some of their beliefs and some of their values. All the way up to private investments, whether it's a diversified portfolio of private impact investments for European corporate pension to the more direct investments, Margaret and her colleagues make. Something like Northvolt, building the gigafactory in Europe for batteries for electric vehicles or investing in financial inclusion in India, Latin America and actually right here at home. And it's -- I see a lot of the actually business leaders in the room that are working day-to-day on this, right? That's what the businesses are doing. But a lot of it is the people organizing to really continue to build out these efforts.

Now throughout the day today, the messaging was very clear from David to John to Stephen. One Goldman Sachs client centricity. What does that look like as it relates to sustainability?

Yes. I mean, this has turned out to be a really great use case, an exemplar of One Goldman Sachs, because really, what's that all about, right? Let's take a significant top-of-mind issue that's central to clients that has complexity on their end and where we have a range of capabilities on our end, and let's really mobilize that. I think John said, we want to be the first call for our clients on the most important questions of the day, and this is certainly one of those right now. And so I think we've seen it as a good illustration of really what this is about.

One quick example I'd add here. And I think most people in the audience heard Eric Lane speaking earlier about our ultra-high net worth business, right? It's the core of our wealth management practice. And over the last year and really several years, we've realized those clients specifically are really looking for these types of opportunities. And so we worked, right? The Consumer & Wealth Management business, along with our Asset Management business to figure out how to get those clients directly into some of the investments that our team is making. So I think it's exciting not just to see the One Goldman Sachs approach, and how it relates to sustainability, but how that all relates to some of our growth areas.

Maybe just add to your point about dragging the out of abstraction into the real world. So what does it look like with a client, right? [ I remember a ] client actually that Margaret and I worked on together, we sat down holistically and said, "What are your needs? What are your pain points? How can we help?" And have multiple work streams we're project managing, ranging from raising new kinds of capital for them, helping them think about how to tell their ESG and sustainability story to the market and tell it effectively. They want to invest in their balance sheet capital in a way that's aligned with their diversity goals. They want to push renewables up and down their supply chain and look at innovative approaches to offsets, and when we came together, they wanted to tap our expertise on affordable housing.

So John, you mentioned clients, Margaret mentioned clients, what clients is this approach most relevant for?

Somebody asked me this question the other day, and I thought for a second and I said, "Well, really it's relevant for any client that has investments, that has investors, that has customers, that has employees, just -- at the end of the day, it's -- I mean, literally, it's anyone with a pulse". And I think the most common phrase I'm getting from a lot of our business leaders and even the last couple of days, so many of us are concentrated here, the phrase is, every single one of my client conversations dot, dot, dot, right? I think that's really coming up left, right and center. And so I think let's look at why that's happening. Within corporations, they see markets that are changing consumer preferences are changing. They're getting asked new questions by supply chain partners and investors and their employees. So this is something that's really stood out. I talked to the CFO of a company who said, "I have one ESG issue, and it's my workforce. U.S. has [ 3 and change ] unemployment. The workers I need to fuel my business, the unemployment rate is 0. Those people have lots of choices, and they're not going to choose me unless I show them they can do work that's meaningful and then we do it in a purposeful way." Asset owners are seeing an investing environment that's changing, new risks, new opportunities they're trying to navigate it. And asset managers are just stuck in between those 2. And so it's really coming up across that spectrum. I think a point that's sometimes lost is you hear about work we do with leaders in these sectors, leaders in these practices, and that's important. People are different points in that spectrum. Our job is to find where people are and help them if they're not the leaders of today, help them become the leaders of tomorrow. I mean Richard talked about that great example of DONG ENERGY becoming Ørsted, where the value is unlocked and actually that changed that transition where we can be a great partner.

So how does this relate to our own business at Goldman Sachs? Is Goldman eating its own cooking?

Fair question. Look, let's think about things like environment and climate. I think we've been a leader for some time talking about this all the way back in 2005, having environmental targets. On the business side, basically, every business of the firm has finance invested or owned over a gigawatt of clean energy last year, right? So significant commercial footprint activity and growth ahead. But on our own front, we've been carbon neutral since 2015. We're the first U.S. company to be a triple joiner for the climate Group's initiatives on electric vehicles, renewable power and clean energy. And what's been interesting about that is there's a commercial application to that. It's not just about coherence and consistency. And by the way, the coherence and consistency comes from the fact that we do have core views of what good business is and where the world is going. It applies to our business and how we manage ourselves. But what's happened is clients want to know about our journey. They want our advice. How do we do it? What did we learn? How can we help them? That's a conversation where we've done for ourselves suddenly becomes commercially useful. And take an area where we've had some recent new exciting announcements, right? I think David talked about the work on board diversity for companies, we take public. Think about launch with GS as investment initiative, think about the federal instruments fund. Liquidity management that actually works with a diverse set of counterparties. And think about our own work towards our own diversity goals, right? So really trying to take those core views of what good business is and apply it to the work we do externally and how we manage ourselves.

So turning to you, Margaret. Your team has been focused on inclusive growth for 20 years now. What's more, however, you figured out a way to do it that's actually accretive to the bottom line. Can you walk us through what's different about your strategy?

Sure. So at its core, the mandate for our team is to generate strong financial returns, investing in underserved communities around [ ES ]. So I'm talking about places like the South Bronx, West Baltimore, south parts of Los Angeles, and these are all communities that have struggled with disinvestment, right? These aren't places that are top of mind for traditional investors. And so 20 years ago, we thought we had a really unique opportunity to invest in these places that certainly were not commercially obvious, but with the right intention we could create value and unlock value in a way that other investors were not exploring or weren't employing what we thought were the right approach is. And so this dual ambition of both the profit and the purpose predates a lot of the excitement that, John was just talking about around sustainability. We weren't 20 years ago, having ESG panels or talking about impact investing, but we knew that we were onto something. And if we could invest with the right intentionality and focus and flexibility, we could not only create value in these neighborhoods and for these neighborhoods, but do it in a way where we create shareholder value at the same time.

Now you and I have worked together for over a decade, and I've heard you talk about your team's work as place-based. Can you tell us more about that? And why that focus on place?

Sure. So if we think about the path to economic opportunity in the U.S. today, it is not straightforward for everyone. There is an abundance of data on that point. And we feel pretty strongly that one of those dividing lines is place. Geography, this concept that your ZIP code is your destiny. And if you know where someone grew up, where they were born, even where they went to elementary school. With pretty close accuracy, you could predict outcomes of their entire life. What their ultimate educational attainment would be? Their lifetime earned? Their physical health? In some of our low-income communities in the U.S. today, life expectancy is as much as 20 years less than in our high-income neighborhoods. And so given that set of facts, if you are trying to move the needle on those issues, and you're trying to change the opportunity set for those individuals and families living in the stress communities today, and I'm talking about 50 million people, in the U.S., you have to focus on place. You have to consider their neighborhoods down to the blocks. And those blocks, they need new attainable housing that's actually affordable. They need new facilities for health care providers for schools, for not for profits. They need jobs that are actually going to provide a pathway to the middle class. And so to do all that, that's what sustainable economic growth looks like and to do it in a way that's inclusive -- I feel pretty strongly, you not only have to consider place, but very specifically, the places where we're not seeing economic growth.

So could you share with us a place where you've invested that faced challenges? Because I think the examples really make it real.

Yes. I think one really good example is Newark. So Newark is New Jersey's largest city. It was once thriving on every measure. And that turned in the late '60s, Newark experienced race riots, like many of the cities around the country at that time. It had a significant loss in population from the suburbs. There was a shrinking manufacturing sector. So all of those things began what were decades of decline and disinvestment. And yet, at the same time, there's so much that's fundamentally strong about Newark. It -- even where it sits in the regional economy, right? So right here in Manhattan, we could all get to Newark in 20 minutes, right? It has really great higher educational institutions, it has a handful of Fortune 500 companies are headquartered there. I could go on and on. It has one of the busiest airports in the country, one of the busiest seaports. So the challenge for our team was, how do you make commercial investments that really leverage all of that strength that the city has, but then actually do it in a way that's going to benefit local residents.

So walk us through -- what did you do there?

What did we do? So we've invested close to $1 billion in Newark. And I think the strategy in Newark, and it's really an example of our strategy across the board: one, we have to be comprehensive; two, it's a deeply partnership-driven approach; and then three, you have to innovate. And so if you look at our portfolio of investments in Newark, it includes new multifamily housing in the downtown, right? That sounds quite simple. It hadn't been done in 4 decades. We financed several K-12 schools for some of the city's lowest-income kids. We took actually some of that old manufacturing history in the form of these old underutilized buildings and rehabbed them for new use and new ideas. One of those buildings actually houses the largest aeroponics farm in the world. And we created 100 jobs in that community. And so that's just a sample of the breadth of the types of work we're doing. And to be that comprehensive, we have to be comprehensive financially ourselves. So when we first started investing, we only invested equity. It was in one tool, one solution, and we learned pretty quickly that wasn't enough. And so now we use a whole host of lending vehicles and tax credit instruments, and that's been really effective. And then on the partnership side, and I think David really put this really eloquently earlier today, the firm is really proud of the way that it has these like deep client relationships. And so in Newark, a lot of that looks like what you'd expect. We partner with the largest real estate operators, some of the corporates I mentioned and then there's a really important public-private overlay. So we're working with the mayor, the economic development authority, not only because we're partnering directly, but to make sure that what we're investing in is actually aligned with their priorities. And then the last part of the partnership strategy, I think, is really important, call it our ground game, we have deep relationships in these communities. We are close to the high school principal, the small business owner, the arts not for profit. And that is -- that's -- you have a coalition like that, it not only ensures that the investments you're making are actually responsive to the needs on the ground, but it's incredibly important commercially. It's a key risk mitigant to have an actual local coalition that is surrounding your work and being supportive. And then on the innovation front, and look, this is not a UIG strategy or a sustainable finance strategy, this is just part of the firm's ethos, and Stephanie talked about it. We believe that yesterday's ideas, it's just -- they're just not going to solve today's issues, right? The issues in Newark are complex, and they did not evolve overnight, and the solutions will also not be simple. And so we have to roll our sleeves up I'll give you one quick example. The city was trying to figure out how to rehabilitate its public housing stock. We wanted to do that in a commercial way. And so we worked with the city, the housing authority the federal government through HUD. We worked with actually a really incredible Goldman client, a large energy company, and we invested close to $100 million in energy efficiency retrofits. And so we, one, actually created better living conditions for 6,000 families in Newark that were on incredibly low income, we created, and John will love this, a portfolio of sustainable and resilient buildings and because we structured the financing to be supported by those energy savings, we actually created a more sustainable housing authority in and of itself. And so that set of outcomes, if we weren't willing to be humble and realize, we didn't know how to do this, and with something -- we couldn't just roll a structure off the shelf, we wouldn't have been successful. And so that kind of innovation with the right partners at the table and a comprehensive approach. It's allowed us to make real strides in Newark.

So comprehensive, partner-driven -- and John, you mentioned this too, and I've heard it throughout the day, Goldman's focus on innovation?

Absolutely.

So a last question for you. Looking ahead, what should investors be focused on? What's next?

What's next? Yes, I think John really touched on this earlier. I think growth, right? I think as a society, we're having this conversation today about -- you mentioned this, the wealth gap, socioeconomic inequality, this debate about who benefits from economic growth and who doesn't. And at the same time, I think there's this growing appreciation for the role that private capital has to play, right? The public sector, we know, it's not going to solve these solutions on their own, philanthropy very crucial, but also not a silver bullet. And we're hearing this from our clients across the board, and that is the mayors in our largest cities, housing groups in the [ Royal South ], there's never been this kind of thirst for new ideas and new approaches and new capital sources. And so for those with capital, right, the asset managers and investors, these are our firm clients we're talking to every day, they're looking for more of these types of investment opportunities and so that will drive growth. And I don't even just -- our own business, as an example, 20 years ago, we were investing $10 million, $20 million a year, all Goldman balance sheet. In the last year alone, we invested over $1.2 billion, and that was a mix of Goldman Sachs' capital and client capital, and I think you're going to see that type of growth across the sector, and that's exciting for investors, right? That's just going to be more opportunities and options. And I think for communities, that's exciting because I think it's just going to mean more solutions.

When I think that -- I think 2 things, right? That really stand out. One is the importance of both themes, right? It's not inclusive growth or climate transition. Both are important, both individually, but also that Newark example, right? You need both levers to really make the economics work.

And so I think it's in this comprehensive approach, right? talking about private capital. I think the firm also has just a really strong ethos around how we use our philanthropy in this way, too. So I'll pass it back to you to speak about that.

Sure. Look, that's right, from David to Margaret to John to me. Our purpose is clear. We advance sustainable economic growth and financial opportunity. I thought I'd share a bit with you about our 2 signature philanthropic programs, 10,000 Women and 10,000 Small Businesses. As you know, through these programs, we invest in communities. We do so by providing access to capital and best-in-class education. I remember a small business owner. He owns a barbecue sauce business from your hometown, Margaret, Houston. And he said, "I feel like I got a PhD in entrepreneurship from Goldman Sachs". Look, these programs are core. They're core to who we've been, to who we are, and to who we will be. So today, I thought I could share with you a few things that you may not know about these programs. So let's take 10,000 Women. We launched that program in 2008, less than 5 years later, we've achieved the goal of providing best-in-class education to 10,000 women's small business owners in 56 countries. But there was more to be done. These women were telling us something. And frankly, we needed to listen. They were saying Goldman Sachs, best-in-class education is great, but it's not enough. We need capital. We need capital to grow our businesses. And Margaret and John know this very well, in 2014, we partnered with the IFC and the World Bank to launch the first of its kind, gender finance facility. So what's happened over the last 5 years. To date, that facility has deployed $1.45 billion, bringing our combined reach to 100 countries. In 2018, we said, "Oh, let's take the program off -- online." And now that the program is online, women's small business owners from China to Chile, from Brazil to Bangladesh, from Sri Lanka to South Africa, have access to this best-in-class curriculum. As of this morning, that number stands at 50,000 and we're well on our way to reaching 100,000 women small business owners. A few weeks ago, I was talking very passionately about our 10,000 Women program as I do from time to time, and someone said to me, "Well, what about business owners at our own doorstep here in the United States?" Well, that's 10,000 Small Businesses. We launched that program in the U.S. in 2009 and the U.K. in 2010. A $500 million commitment to communities, to the true engines of economies, small businesses. Now I grew up just across the river in Brooklyn, and my aunt, [ Aunt Aigo], she owned a small wedding cake business. And as a child, I saw from the inside, the determination, the grit, the hustle, it takes for a small business to succeed. It's hard. So over the last decade, we've been trying -- we've been trying to bridge that gap between Wall Street and Main Street. So what does that look like? Thus far, we've served 9,100 small business owners across all 50 states, including DC and Puerto Rico. In the U.K., that number stands at 1,700 small business owners. So as you can see, their collective footprint and impact is anything but small. Employees, 175,000; revenues north of $12 billion. A lot of us in finance we struggle to explain to our families, what it is we do all day.

I don't even try.

When my 2 young sons ask me, I say, "I spend my time meeting with business owners, talking with them about their needs." Business owners, like the ones in the communities in which we work and live. Business owners like Carla Walker-Miller". She's from Detroit. Since graduating from our program, she's grown her revenue sixfold to $25 million. She's hired 70 new employees. And I just learned she's opened a new facility in new Central Detroit, a distressed area of Detroit. Look Carla is just one example. Time and time again, when I meet with small business owners, they tell me the same thing that they want from Goldman Sachs. They say I want Goldman Sachs to invest in me. I want Goldman Sachs to invest in my business. I want Goldman Sachs to invest in my community, and that's exactly what we're going to keep on doing. With that, I want to pivot to questions. They're feeding them to me here. There's one -- sure. Go ahead.

I'm Mike Mayo with Wells Fargo security. I have one question and a follow-up. The $750 billion over a decade, just relative to the size of your balance sheet I'm having trouble.

So that covers...

That's a huge commitment? Is that like lending and investments...

So investing, advising and financing. So it covers all 3 of those.

And then you add it all up, and I guess you forecast $750 billion over the next 10 years, that's best in class. And the other point is, look, you guys are doing all sorts of innovative things, you have the maternity leave and paternity leave of 5 months, you have the pronoun initiative, you have 10,000 Women, 10,000 Small Businesses and really making such great strides, but then you have [ like ] 1MDB with the Malaysian scandal and David referred to that earlier. How do -- how should we think about reconciling all the good work that you're doing, yet on the other side of the house, you have the 1MDB scandal and have that cloud some of the perception of Goldman Sachs. What would you say to us?

I think, as David mentioned earlier, our focus has always been on risk management and will continue to be on risk management. Specifically, we can't, as you know, go into any details on 1MDB, but I can't underscore our intense focus on risk management. I came from that side, I was a former Chief Compliance Officer, and I'm a recovering lawyer. And so I see live for the last 14 years, our focus on that, and frankly, was a part of that team. I'm going to pivot to a question on reporting because I see reporting has been an area in sustainability that's been a tremendous area of focus. I don't think anybody has talked about reporting before, but maybe you can talk -- take that one, John?

Oh, my gosh. I mean, this is something we all spend a lot of time in. And I think this is an acute pain point for everyone across the spectrum on sustainable finance. And I don't get through any conversation for more than very long before the, "How do we deal with data?" Right? How do we deal with this. I actually pulled out my watch during a meeting recently, and I said 27 minutes, you set the record for the longest we've gone before someone's complaining about the state of data and transparency in the ESG and the sustainability world. S o what we see is a muddled, difficult landscape. It's an issue that's important, but cloudy. So corporations are increasingly beset by numerous and growing requests for different data sets from different people. I met with the CFO of a company recently. She calculated. She had been asked for 2,000 different ESG data points in the last year, right? On the other hand, asset owners are trying to navigate a complex changing world and really understand what's under the hood of their portfolios and getting an awful lot of noise and not a lot of signal. And Asset Managers kind of sit between the 2 feeling this sort of tug of war. And so for us, we want to help the world move to a place where we have better data on fewer things that matter more. That's good for companies, focus on the material issues that give us insight into performance of your business. For asset owners trying to navigate a changing world, an asset manager trying to make good investments and communicate what they're doing. And so we've gotten a good start, our colleagues in GS SUSTAIN have a research framework based on SASB, the Sustainability Accounting Standards Board, our investors within Asset Management use that in buying stocks and buying bonds. I see someone that built one of our dashboards in this room right now. And we tried to lead by example. So we were the first U.S. bank to report using SASB. And we have an interesting set of resources. Our investment bankers are asked by corporate clients, how should I report? Or asset managers fill proxies and engage around what reporting is material and useful. And what do we use as investors? And we're doing trainings and teachings for asset managers and so how do we use the full weight of our organization to move to better data? Fewer things matter more.

Well, with that, better data, fewer things that matter more. I want to thank you for your time. We'll be going upstairs to the 43rd floor for cocktails. On sustainability, that -- we're at an inflection point, and it demands our leadership and our focus, and we're very, very focused on it. We're a public company, and we take the public part of that very, very seriously. So we look forward to talking with you more over cocktails. Thank you very much.

Thank you.