Goldman chief outlines asset reduction

Nov 14 2012, 09:35 IST
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SummaryGoldman Sachs Group Inc would have $728 bn in risk-weighted assets Basel III capital rules.

Goldman Sachs Group Inc would have $728 billion in risk-weighted assets under yet-to-be-implemented Basel III capital rules, 67 percent more than the investment bank has under current regulations, Chief Executive Lloyd Blankfein said on Tuesday.

Goldman aims to reduce risk-weighted assets to $700 billion by the end of 2013, with $18 billion of that coming from a decrease in credit risk, and another $11 billion coming from a decline in market risk.

Much of the reduction will come from an expiration of existing trades, like mortgage securitization, derivative portfolios and some investments that will be repaid, Blankfein said at a conference in New York hosted by Bank of America Corp.

For more than a decade, larger size and complexity were viewed entirely as synergistic and virtuous, Blankfein said. For the first time, it's clear that size and complexity come with a higher cost.

Blankfein's disclosure of risk-weighted assets under Basel III rules was the first time Goldman reported those figures.

At the end of the third quarter, the bank said it had $435.3 billion in risk-weighted assets under current rules, and expected that number to fall by $88 billion by 2015.

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