NEW YORK--(BUSINESS WIRE)--Sep. 22, 2008
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that it will
become the fourth largest Bank Holding Company and will be regulated by
the Federal Reserve.
In recent weeks, particularly in view of market developments, Goldman
Sachs has discussed with the Federal Reserve our intention to be
regulated as a Bank Holding Company. We understand that the market views
oversight by the Federal Reserve and the ability to source insured bank
deposits as providing a greater degree of safety and soundness. We view
regulation by the Federal Reserve Board as appropriate and in the best
interests of protecting and growing our franchise across our diverse
range of businesses.
Since the spring of this year, the Federal Reserve has been reviewing
our liquidity and funding profile, capital adequacy and overall risk
management framework. We are pleased that the Federal Reserve recognizes
the strength and health of our liquidity and funding and the overall
quality of our risk management. We have maintained our Tier 1 capital
levels well above the Federal Reserve’s “well-capitalized”
threshold of 6 percent since these ratios were first calculated in 2004.
For the past several quarters, in light of the difficult market
environment, we have been reducing our risk exposures and increasing our
capitalization. Our Tier 1 capital ratio at the end of the third quarter
was 11.6 percent.
“When Goldman Sachs was a private partnership,
we made the decision to become a public company, recognizing the need
for permanent capital to meet the demands of scale. While accelerated by
market sentiment, our decision to be regulated by the Federal Reserve is
based on the recognition that such regulation provides its members with
full prudential supervision and access to permanent liquidity and
funding,” said Lloyd C. Blankfein, Chairman
and CEO of Goldman Sachs. “We believe that
Goldman Sachs, under Federal Reserve supervision, will be regarded as an
even more secure institution with an exceptionally clean balance sheet
and a greater diversity of funding sources.”
Goldman Sachs already has two active deposit taking institutions —
Goldman Sachs Bank USA and Goldman Sachs Bank Europe PLC —
which, together, hold more than $20 billion in customer deposits. We are
moving assets from a number of strategic businesses, including our
lending businesses, into GS Bank USA. With over $150 billion in assets,
GS Bank USA will be one of the ten largest banks in the United States.
While these assets are fully funded for term, they also are available to
be funded by the Federal Reserve. We intend to grow our deposit base
through acquisitions and organically.
Goldman Sachs is a leading global investment banking, securities and
investment management firm that provides a wide range of services
worldwide to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net worth
individuals. Founded in 1869, it is one of the oldest and largest
investment banking firms. The firm is headquartered in New York and
maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major
financial centers around the world.
CONTACT: Media
Lucas van Praag, 212-902-5400
or
Investor
Dane Holmes, 212-357-2674
The Goldman Sachs Group, Inc. (NYSE: GS) today announced that it will
become the fourth largest Bank Holding Company and will be regulated by
the Federal Reserve.
In recent weeks, particularly in view of market developments, Goldman
Sachs has discussed with the Federal Reserve our intention to be
regulated as a Bank Holding Company. We understand that the market views
oversight by the Federal Reserve and the ability to source insured bank
deposits as providing a greater degree of safety and soundness. We view
regulation by the Federal Reserve Board as appropriate and in the best
interests of protecting and growing our franchise across our diverse
range of businesses.
Since the spring of this year, the Federal Reserve has been reviewing
our liquidity and funding profile, capital adequacy and overall risk
management framework. We are pleased that the Federal Reserve recognizes
the strength and health of our liquidity and funding and the overall
quality of our risk management. We have maintained our Tier 1 capital
levels well above the Federal Reserve’s “well-capitalized”
threshold of 6 percent since these ratios were first calculated in 2004.
For the past several quarters, in light of the difficult market
environment, we have been reducing our risk exposures and increasing our
capitalization. Our Tier 1 capital ratio at the end of the third quarter
was 11.6 percent.
“When Goldman Sachs was a private partnership,
we made the decision to become a public company, recognizing the need
for permanent capital to meet the demands of scale. While accelerated by
market sentiment, our decision to be regulated by the Federal Reserve is
based on the recognition that such regulation provides its members with
full prudential supervision and access to permanent liquidity and
funding,” said Lloyd C. Blankfein, Chairman
and CEO of Goldman Sachs. “We believe that
Goldman Sachs, under Federal Reserve supervision, will be regarded as an
even more secure institution with an exceptionally clean balance sheet
and a greater diversity of funding sources.”
Goldman Sachs already has two active deposit taking institutions —
Goldman Sachs Bank USA and Goldman Sachs Bank Europe PLC —
which, together, hold more than $20 billion in customer deposits. We are
moving assets from a number of strategic businesses, including our
lending businesses, into GS Bank USA. With over $150 billion in assets,
GS Bank USA will be one of the ten largest banks in the United States.
While these assets are fully funded for term, they also are available to
be funded by the Federal Reserve. We intend to grow our deposit base
through acquisitions and organically.
Goldman Sachs is a leading global investment banking, securities and
investment management firm that provides a wide range of services
worldwide to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net worth
individuals. Founded in 1869, it is one of the oldest and largest
investment banking firms. The firm is headquartered in New York and
maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major
financial centers around the world.
CONTACT: Media
Lucas van Praag, 212-902-5400
or
Investor
Dane Holmes, 212-357-2674