$2.1 billion loss ends 2008 on sour note for Goldman Sachs
Goldman Sachs has posted a $2.12 billion net loss for the fourth quarter - its first since going public in 1990 - citing "extraordinarily difficult operating conditions, including a sharp decline in values across virtually every asset class".
The firm recorded net revenues of $22.22 billion for the year ending November 28, less than half of the $45.99 billion turnover posted in 2007. Earnings dropped even more precipitously to just $2.32 billion for 2008, down from $11.6 billion the previous year.
Income was down across most business lines, with fourth quarter investment banking revenues slumping 48% compared with the last three months of 2007 to $1.02 billion, and financial advisory turnover plunging 54% from the previous year to just $547 million.
The story was the same in fixed income, currency and commodities, with net revenue down 77% for the year to just $3.71 billion, incorporating a $3.1 billion loss related to non-investment-grade credit origination activities and losses from investments including corporate debt and public and private equities.
Impairments on mortgage-related business were on the same scale, with losses of $1.7 billion on residential mortgage loans and securities and losses of $1.4 billion on commercial mortgages loans and securities.
Asset management and securities services saw revenues climb 11% in the year to the end of November to $7.87 billion, although fourth quarter revenues slipped 5%. Assets under management decreased $89 billion over the course of the year due to market depreciation primarily in equity assets.
"Clearly 2008 represented one of the most difficult operating environments in modern financial history and certainly the most challenging year since we became a public company. Asset price declines, volatility and illiquidity were unprecedented across both equity and credit markets," said David Viniar, chief financial officer at Goldman Sachs, on an earnings call.
"In the first nine months of the year these stresses had a varied impact on our results...however, the significant magnitude of the stresses, and the fact that they occurred simultaneously, meant that they negatively impacted fourth quarter results," he added.
Compensation and benefit expenses fell 46% for the year, reflecting lower levels of discretionary compensation due to lower net revenues. Chief executive Lloyd Blankfein announced in November that he and six other senior officials - including Viniar - would forego their annual bonuses in light of the ongoing market crisis.
In 2007, Goldman Sachs awarded bonuses to the value of approximately $17 billion.
See also: Executive pay reviewed at Barclays, UBS and Goldman
Goldman cuts 10% of workforce
Goldman equity tanks as fears grow over Morgan Stanley
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Basel Committee reviewing design of liquidity ratios
Focus on LCR and NSFR after Silicon Valley Bank and Credit Suisse, but assumptions may not change
Risk, portfolio margin, regulation: regtech to the rescue
A white paper outlining the complexity of setting the course for risk, margin and regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Most read
- SG trader dismissals shine spotlight on intraday limit controls
- Basel Committee reviewing design of liquidity ratios
- Too soon to say good riddance to banks’ public enemy number one