End of an Era at Goldman Sachs
Goldman Sachs is losing another key strategist as chief credit strategist Lotfi Karoui exits the investment bank after 18 years of service. Karoui, who also headed credit, mortgages and structured products research, was among the firm’s most prominent fixed income voices and had been promoted to partnership in 2018. His departure follows news that David Kostin, chief US equity strategist, will retire at year’s end, creating significant gaps in Goldman’s research leadership.
Karoui’s exit represents a substantial loss of institutional knowledge at a critical juncture for credit markets. According to sources familiar with the matter, the departure was confirmed by Goldman representatives who declined to provide additional details about succession plans or Karoui’s future endeavors.
Rise Through the Ranks
Karoui joined Goldman in 2007 as an associate in credit strategy research, bringing an academic background that distinguished him from many Wall Street peers. He rose to managing director in 2015 and earned the chief credit strategist title in 2017. His promotion to partnership in 2018 placed him among the bank’s elite decision-makers and compensation earners.
Before his Wall Street career, Karoui demonstrated remarkable academic credentials, teaching finance and operations research at both undergraduate and graduate levels at McGill University and HEC Montreal. He earned his PhD in financial economics and a master’s in financial engineering from these institutions, respectively. His academic background informed his analytical approach throughout his Goldman tenure.
Global Perspective and Industry Leadership
Born and raised in Tunisia, Karoui brought international perspective to Goldman’s research division. He currently serves as chairman of the Arab Bankers Association of North America (ABANA), highlighting his commitment to diversity and inclusion in financial services. This global viewpoint proved particularly valuable during periods of international market stress and sovereign debt crises.
Karoui’s leadership extended beyond credit strategy to encompass broader financial market developments and regulatory changes affecting global banking institutions. His research often considered the intersection of monetary policy, sovereign risk, and corporate credit conditions.
Recent Market Calls and Strategic Shifts
In one of his final research notes, Karoui made a significant call on European bank debt, downgrading investment-grade bonds from banks to underweight from neutral. He cited sovereign fiscal risk—particularly in France—as creating substantial downside risk for the banking sector. This cautious stance reflected his methodical approach to risk assessment amid changing macroeconomic conditions and government debt challenges.
His research consistently addressed complex credit instruments and structured products, areas that have seen remarkable transformation through technological innovation and automation. The credit strategy group under his leadership navigated multiple market cycles, including the 2008 financial crisis, the European sovereign debt crisis, and the COVID-19 market disruption.
Broader Implications for Goldman and Credit Markets
The departure of both Karoui and Kostin within months signals a significant transition in Goldman’s research leadership. These changes come as financial institutions face evolving challenges, including shifting regulatory landscapes and global trade dynamics that affect credit availability and pricing.
Goldman must now navigate the dual challenge of replacing seasoned strategists while maintaining research quality during a period of market uncertainty. The bank’s ability to develop new talent will be critical as it addresses emerging industry developments and manufacturing evolution that impact corporate borrowers.
Legacy and Future Direction
Karoui’s tenure spanned a transformative period for credit markets, characterized by unprecedented central bank intervention, the growth of passive investing, and the emergence of new credit instruments. His research contributed to Goldman’s reputation for sophisticated fixed income analysis and helped clients navigate increasingly complex market dynamics.
As financial services continue evolving through technological integration and digital transformation, Karoui’s departure marks the end of an era while raising questions about how Goldman will adapt its research capabilities for future market challenges. The succession plan for his roles will be closely watched by credit market participants who relied on his insights for nearly two decades.
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