Goldman Sachs to repay Warren Buffett’s investment, newspaper report claims

22 October 2010

Goldman Sachs is contemplating repaying a $5 billion investment to Warren Buffett which the bank used to navigate the global credit crisis.

According to the Wall Street Journal, which cited unnamed sources familiar with the matter, the investment by the Berkshire Hathaway chief executive officer (CEO) helped boost confidence in the bank during the period of volatility.

His investment is thought to have helped Goldman Sachs raise the same amount again the following day.

The bank now has the option to repurchase the shares from Mr Buffett for $5.5 billion although such a sale would need the approval of the Federal Reserve as well incur an additional charge of $1.6 billion, the newspaper reported.

Goldman Sachs is reportedly contemplating using some of the $173 million it has in excess liquidity to repay the Berkshire Hathaway head.

According to the report, Mr Buffett has received dividend payments equivalent to ten per cent per year, a figure which is thought to have cost the financial services provider up to $1 billion so far.

Earlier in the week, Goldman Sachs unveiled its financial results for the third quarter of 2010 which showed its profits had fallen by 40 per cent year-on-year.

By Jim Ottewill

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