Goldman Sachs Group's co-head of investment management, Edward Forst, will retire at the end of the year after 16 years with the company, according to a memo sent to employees on Friday.

Forst, who has been co-head of the investment management division since 2010 alongside Tim O'Neill, joined the firm in 1994 and there had been talk within the company that Forst might be a successor to Goldman CEO Lloyd Blankfein.

Forst will be replaced by Eric Lane, the investment division's chief operating officer, according to a separate memo seen by Reuters.

Forst, 50, has headed up various groups within the securities company, including Capital Markets and the Global Credit business. He was named head of IMD in 2007 but remained in the role only until the following year, when he left to take a job as Harvard University's first executive vice president.

That stint was brief. Forst was back in the Goldman fold in 2009, this time in a strategy role. In 2010 he was appointed co-head of IMD, which includes both Goldman Sachs Asset Management and Private Wealth Management.

Forst is yet another high-level loss for Goldman Sachs, which has been bleeding partners this year.

One of those departures is Kevin Kennedy, the head of the bank's Latin America group and a member of the management committee. He is retiring at year-end after almost 40 years with the company.

Eric Lane, Forst's successor, has been chief operating officer of the investment management division since 2009. He joined the firm in 1996 and was named partner in 2002.

IMD itself has battled an exodus of staff this year in its asset management business. Goldman Sachs Assets Management shuttered a well-known hedge fund, Global Alpha, in September after suffering deep losses through 2011. Investors were told that Katinka Domotorffy, the head of the group's quantitative investment strategies, would retire at year's end.

(Reporting by Katya Wachtel in New York; Editing by Derek Caney and Steve Orlofsky)

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