Steven D. Goldstein

When he was given the top job at American Express Bank in March 1991, Steven D. Goldstein says, it was “like putting my face on a fire hydrant.” Neglected while the parent company took its 1980s roller-coaster ride with Shearson and Lehman, AEB had  gained a lot of autonomy, but not much profit. It generally kept a low profile inside and outside Amex. The bank, says Goldstein, 42, “did not feel or act mainstream.” Many Americans, in fact, don’t even know the bank exists, because it services only foreign clients.

Started in 1919 in Paris and other locations to cash Amex travelers checks, it has grown to have one of the top five international networks of any U.S. bank and has assets of $13.6 billion, with 81 locations in 37 countries. In Greece and India, it is the bank of choice for wealthy entrepreneurs.

But in the U.S., AEB recently was known mainly for its ill-fated purchase of Edmond J. Safra’s Trade Development Bank in Geneva. The subsequent Amex feud with Safra ended with an $8 million Amex contribution to Safra’s favorite charities and a severe PR setback for then-Amex Chairman James D. Robinson III. When the dust settled, the company shed the Trade Development Bank, and Robinson asked Goldstein to take over at AEB.

By 1991, AEB’s net income was heading south to $60 million from $111 million in 1990, and problem loans were over 9 percent. “Within AEB,” says Goldstein, the bank’s chairman, president, and CEO, “there was a high degree of confusion about what business they were in. Each time they enacted a new strategy, they did not sever the ties with the prior strategy, so you can imagine over time a potpourri of activities, any one of which at some time was in vogue, but later was not. Bank officers and executives had real sympathy with the clients, but they didn’t know how many they had, partly because there was no marketing department. They were dealing with lore, rather than facts.” Goldstein immediately assembled a team of key people and made a fact-based study of the bank over 90 days. The country managers were asked to meet together for the first time in eight years, and companywide staff evaluations were made. “We substantially raised the bar for performance,” Goldstein says. As a result, few of the bank’s top managers kept their jobs, and half of the country managers eventually were replaced. Eleven AEB businesses were sold or closed; operations in two countries were shut down; millions of dollars of loans were written off; and in 1992, net income took another hit, down to $19 million after accounting charges. The study prompted AEB to refocus on providing services for wealthy individuals and their businesses, and selected financial institutions. These days, the bank comprises four core businesses: private banking, trade-finance and other commercial services, treasury, and correspondent banking. In addition, AEB is more closely aligned with the overseas strategy of Amex’s Travel Related Services, especially in such areas as credit, loans, and banking for foreign Amex cardholders. The bank shuns long-term business loans in favor of fee-based services and trading, and it has decentralized its decision-making process, traditionally coordinated from its New York headquarters.

Goldstein served nine years with Travel Related Services before moving to AEB. A native New Yorker, he graduated from City College and received an MBA from New York University. After a stint with Citicorp, he joined Amex as a TRS VP in 1982 and quickly became the first president of the Amex Centurion Bank a year later. By 1991, he was president of Amex International’s Consumer Financial Service Group. “I’m not a banker per se,” he admits. “I had demonstrated that I could build and turn around businesses.” Indeed. AEB’s net income last year jumped to $81 million, and non-performing loans shrank to 3 percent. Nonetheless, AEB comprises only a small part of the Amex machine, and Harvey Golub, chairman and CEO of the parent company, has stated his intention to grow the bank “modestly.”

So Goldstein will continue to guide AEB, but would he eventually like to run Amex itself? “Yes,” he says, “but the job’s not available now.”