Goldman Sachs to take $3bn hit

17 March 2008

Goldman Sachs is set to announce writedowns of around $3 billion, which is the most the bank has written off since the onslaught of the credit crisis.

Despite the fact that Goldman has weathered the storm of the sub-prime crash relatively well after pulling out of risky investments, it seems the ensuing credit crunch will not leave it untouched.

According to the Telegraph, Wall Street's most powerful investment bank will announce that its first-quarter earnings for 2008 have halved.

The newspaper reports that much of the write¬down is due to the declining value of Industrial & Commercial Bank of China, in which it owns a 4.9 per cent stake.

Goldman's leveraged loan business has also caused it a $1.6 billion writedown after a lack of demand for trading bank debt.

Some $1.1 billion will be written down related to assets owned by Goldman's private equity business.

"These are not the kind of toxic assets which have hurt banks like UBS, Merrill Lynch and Citigroup so badly," an analyst told the Telegraph, referring to other banks' sub-prime investments.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development