London: Having opted to become a commercial bank, Goldman Sachs is planning to acquire up to $50 billion in assets from the ailing American banks, say media reports.
Quoting Goldman executives, the Financial Times (FT) said: “Goldman Sachs is seeking to acquire up to $50 billion in assets from ailing US banks as part of its push into commercial banking.”
Earlier this month, global financial services provider Goldman Sachs and Morgan Stanley became bank holding companies, and come directly under the purview of the Federal Reserve, a move that entails stricter regulations for the previously lightly regulated investment banks.
“Goldman is moving quickly to profit from its push into traditional banking by expanding the activities of its Utah industrial loan corporation, a kind of bank that is regulated by authorities in that western US state,” FT reported.
“Goldman also plans to talk to US regulators to identify up to $50 billion in assets it could buy from troubled lenders. These, too, would be put under the Utah bank,” the daily added.
The Utah bank of Goldman, has about $20 billion in deposits and $25.7 billion in assets.
Goldman is moving to shift $150 billion of assets to the balance sheet of the Utah bank. These would include loans to private clients and other assets that would be found more typically at a traditional commercial bank.
This move shows Goldman’s determination to acquire cheap assets and potentially ailing banks even as it reduces its leverage as it transforms itself into a bank holding company, Financial Times added.
“The bank has the luxury of being proactive because it has already been shedding problem assets,” FT said quoting Goldman Chief Financial Officer David Viniar.
“Goldman has a mere $8 billion in securities backed by commercial mortgages. If it sells these securities today, it would be likely to record a gain,” FT said quoting officials.
The daily further added that Goldman has reduced its holdings of loans backing private equity deals from $52 billion to $8 billion. Besides, last week it raised $10 billion in capital, including $5 billion from Warren Buffett.