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What does the future hold for Goldman Sachs? That question is being asked up and down Wall Street, as outside observers try to divine the intentions of Lloyd Blankfein, Goldman’s chief executive, who used to head up an investment bank but now runs a bank holding company.

Goldman has been described variously as flirting with building a deposit base through online banking, or through an acquisition, or sticking with organic growth, or all of the above. The firm’s decision last week to name Gerald Corrigan, past president of the New York Federal Reserve, as chief of its fledgling commercial banking unit indicates the seriousness with which Goldman is pursuing the endeavour.

Both Goldman and its last independent investment bank rival Morgan Stanley underwent quick conversions into traditional bank holding companies as their stocks plunged after Lehman Brothers’ collapse. They have since raised billions in new capital both privately and from the US government, but further stock price falls remain a risk.

Mr Blankfein is wary of doing anything rash. Goldman is on the verge of announcing its first quarterly loss since going public in 1999, but the last thing its management team wants to do is panic.

Roger Freeman, a bank analyst at Barclays Capital, says the goal at Goldman Sachs, the bank holding company, is to keep the culture and character of Goldman Sachs, the investment bank, intact. “They hope the world doesn’t change too much and that they can maintain their image as an independent broker dealer,” Mr Freeman says.

“They’re shrewd, they’re evaluating everything and they have multiple plans if they get to certain trigger points. The stock price is an important trigger point. Price declines might cause clients to lose confidence and they’re aware of their limited ability to control the stock price.”

Brad Hintz, a bank analyst at Sanford Bernstein, believes the bank will have to change its business model in order to conform with the new regulatory regime that comes with being a bank holding company. “Goldman Sachs is still going to be an amazing firm, it’s just going to have to change.”

Mr Blankfein insists that any changes will be incremental and not seismic and was firm in his response to critics when speaking at a recent investor presentation.

“There have been a number of statements made about Goldman Sachs and the impact of the changes on our firm,” he said. “That we aren’t unique any more, that we might need to do something bold like a merger, that our earnings are driven by non-recurring revenue.

“But it is noteworthy that these statements were made nearly 10 years ago when we went public to diversify our funding and further expand our business.”

Mr Blankfein and the other leading partners do not believe that the firm’s business model has to change, but realise that Goldman’s funding model has to change: hence the interest in online banking.

It is not the first time it has flirted with the internet. A decade ago, the firm engaged the Boston Consulting Group to explore ways of using the web to add value to its private wealth management business. But when the tech bubble burst, those efforts were discontinued.

“Anybody who’s doing the kinds of stuff they’re doing is going to be trying all kinds of new ideas,” says Charles Ellis, author of The Partnership: the Making of Goldman Sachs.

The other options for generating deposits include doing it the old-fashioned way, growing organically through the firm’s platinum-quality private wealth client base, as well as tapping into its connections with treasury departments of the world’s biggest companies.

Goldman’s management will seek opportunities to acquire deposits taken from the Federal Deposit Insurance Corporation following the bank failures expected during the recession. The biggest challenge is how to avoid inheriting the dubious assets of those banks.

As a last resort, Goldman might acquire a bank, but Mr Blankfein and other executives are reluctant to jump into a big transaction just to solve a situational problem. Goldman’s management remains enamoured of the adage, “Marry in haste, repent at leisure”.

The biggest challenge will be to evolve without doing anything that changes its storied brand.

Even Mr Hintz, who predicts a change in Goldman’s model, understands that the brand remains sacrosanct and so he doubts the firm will acquire a conventional bank. “If you acquire a bank, you’ve got Community Reinvestment Act requirements,” he says, referring to US banking rules that require banks to lend in all segments of their communities. “It’s hard for me to believe that Goldman executives are going to be out calling on Korean bodegas.”

Goldman is set to announce a quarterly loss of at least $2bn, according to several analysts. But Mr Blankfein points out that it profited following the Asian currency crisis a decade ago and the collapse of the tech bubble in 2000: “I’ve not lost sight of the fact that many of the most important opportunities in Goldman Sachs’ history came about during times of stress.”

• Gavin MacDonald, the London-based global head of mergers and acquisitions at Morgan Stanley, died on Friday night. He was 47.

Mr MacDonald, who had been in that position for just over a year, had suffered a heart attack at Morgan Stanley's London office in Canary Wharf earlier in the week.

John Mack, Morgan Stanley's chief executive, sent an email to staff on Saturday in which he described Mr MacDonald as an “extremely decent, universally liked, funny, selfless and deeply valued man”.

Mr MacDonald joined Morgan Stanley in 1983 from Cambridge University where he played rugby for the university. He was one of the founding members of the European M&A department, and became a vice-chairman of investment banking in 2004 and was a member of the European management committee.

Copyright The Financial Times Limited 2017. All rights reserved.

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