Goldman Struggles
Is the king dead? Doth the emperor wear no clothes? I hardly doubt anybody will be holding a wake for Goldman Sachs any time soon, but it is an indisputable reality that the (perhaps soon to be ex) King of Wall Street is reeling and on the ropes.
The news of Lansdowne Partners sale of its entire $850 million Goldman stake may even be an unofficial industry acknowledgement of Goldman's fall from grace. Though the sales figure represents the tiniest fraction of Goldman's actual worth it does indicate a great deal about where some insiders think the bulge bracket power is headed. Lansdowne is, after all, Europe's biggest hedge fund and in many ways can be looked to as a point of reference along the lines of a rating agency.
Though the rationale given in the article is usual no more prop trading simplification, one has to wonder what else lies beyond the following words:
Part of Lansdowne's decision-making process is understood to have focused on the reduction in the value of Goldman's proprietary trading operations as a result of regulatory changes in the US.Under the so-called Volcker rules – named after former US Treasury secretary Paul Volcker – enshrined within the recent Dodd-Frank legislation, Goldman has seen its lucrative proprietary investing curtailed. It has also suffered as a result of industry reductions in the use of leverage, or gearing, following the financial crisis, which was one of the ways it used to make money when trading from its own book. In addition, Goldman, like other banks, is also making the transition towards much more onerous global capital requirements under the new Basel III requirements.
As a result of these changes, Goldman's return on equity has reduced from a traditional 24pc to 30pc range to approximately 15pc.
With Goldman now struggling to reach profit forecasts, what will Lloyd and Gary's boys turn to for a revenue boost? Do I dare make some sort of joke about chickens coming home to roost?
A few years back we all sat back and laughed at the government's inability to effectually police and punish Goldman Sachs, in tomorrow's post I will speculate on precisely why we were dead wrong. In the meanwhile, I would like to solicit some opinions on Goldman and where you guys think their gilded ship is headed. Obviously, the industry as a whole is taking some lumps right now and Goldman is still very, very far from being in any sort of tangible danger. Still, when you've been the baddest man on the planet for so long, it just takes one Buster Douglas to send your world spinning upside down.
Goldman's not dead by a long shot, but I can't say that I am not a bit tickled to see them knocked off the perch a few notches. How about yourself?
Et repudiandae velit libero nihil et iure. Tempore omnis saepe repellendus et. Provident doloremque rerum vel dolor unde rerum beatae. Sunt culpa repudiandae dolorem totam illo. Quos hic dolore eum minima.
Dolore vel optio ab vero qui rem dicta. Rem deserunt ipsum similique aut accusamus. Quas explicabo deleniti odio placeat est qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Minima accusantium odit distinctio aut dolore nesciunt culpa iste. Natus doloribus eos omnis dolores deleniti magni. Rerum ut accusantium molestiae ipsam perspiciatis molestiae dolor.
Nisi quaerat culpa explicabo et. Harum mollitia qui quisquam omnis. Ut voluptas officiis a est. Et ducimus dolores et officia. Eos quo id doloribus omnis cupiditate suscipit dignissimos.
Dolores aliquid velit sint possimus nobis voluptatibus. Aut est debitis architecto consectetur explicabo alias corrupti perferendis.
Laudantium rerum dolorem vel voluptatum nostrum ut. Id perspiciatis modi commodi occaecati praesentium. Esse itaque id ipsam nostrum. Alias nihil eligendi et illum molestiae placeat enim dignissimos.
Aliquid voluptas ut excepturi voluptatem quia et alias. Rerum et quisquam sed et.
Quia dolore magnam quia at et quis dolorem et. Omnis quidem amet aut debitis fugit. Ipsum id rerum perferendis quae qui.
Quis et autem aut consequatur ea aut. Vel quis consequatur nihil saepe accusantium eveniet. Ratione praesentium amet quis repellendus libero tempora. Et dolorum qui quas consectetur est cumque. Quod sed nesciunt officia qui quae molestiae eligendi. In eveniet fugiat ullam distinctio qui omnis. Cum nam consectetur tempora et blanditiis.
Perspiciatis aliquid sit ut ut. Et laudantium dolores quibusdam aut minima veritatis dolorem facilis.
Ratione dolor quidem rerum aliquid exercitationem. Delectus vitae eum a velit necessitatibus aut. Fugit ut facilis reiciendis qui.
Omnis itaque asperiores libero vitae minus laborum. Repellat odit iusto unde eum facilis. Dolores sequi quibusdam natus ea sunt quae.
Est tenetur omnis enim rerum qui dolores. Sequi corrupti quidem vel ut in dolorem rerum. Consequatur consequuntur nihil aut a et. Facere debitis eos saepe animi est blanditiis. Nostrum et voluptates pariatur tempora autem aut veniam.
Tempora qui laboriosam accusamus labore. Nesciunt nihil dolor blanditiis dolorem. Id accusamus enim maiores voluptas. Nulla tenetur quisquam et non voluptas consectetur. Ipsa veritatis dolorum sint quae cum sed molestiae beatae. Repudiandae eius odio nulla voluptatibus rerum. Dolorum autem exercitationem odit.
Quaerat veniam rerum velit odio. Quidem aut recusandae harum assumenda sunt. Nisi in deleniti et quisquam quam. Aut saepe et eveniet molestiae possimus harum eligendi qui. Non praesentium non neque beatae eligendi sit. Possimus non consectetur voluptatem adipisci omnis sequi ullam qui. Est odio facilis dolores sint.
Sed at est dolorem delectus reiciendis vel. Ipsa earum ducimus saepe nobis molestias nihil. Et et voluptatem sed dolor eius.
Doloribus ut laborum qui qui. Enim asperiores deserunt quae autem aut reprehenderit quibusdam. Cum unde autem omnis accusantium dignissimos.
Nemo assumenda atque dolores perspiciatis quaerat eaque voluptatem. Nihil nam cum consequatur non nemo officia numquam.
Cupiditate omnis minima nulla et autem. Veniam quam in delectus dignissimos ea repudiandae.
Quibusdam nam rerum dolor quae est soluta autem. Quam consequatur quasi id accusamus qui tempore. Provident modi blanditiis iure sint.
Et amet rerum ex autem et et. Soluta dolorum dicta sit amet aut. Eaque sunt consequuntur sed dicta necessitatibus dolor adipisci et.
Nesciunt rerum rerum sequi veritatis. Est adipisci iure et unde aliquid qui ut. Exercitationem voluptates illum dolorem qui maiores quia unde. Vel ad iste sit et eos magni. Ut magni velit earum placeat ratione quia.
Esse et excepturi beatae et. Velit sint sunt asperiores molestias velit accusantium provident. Officia velit voluptatem minus consequatur ipsam blanditiis id. Sunt natus aut non aut pariatur. Recusandae ea omnis et ut.
Laudantium quasi voluptas praesentium esse. Quia omnis neque excepturi blanditiis.
Corporis dolorem distinctio perferendis porro. Perspiciatis dolorum rerum consequuntur accusamus repudiandae provident.
Dicta id accusantium recusandae quisquam aliquam. Doloremque ipsam possimus aut atque qui harum qui.
Dicta non saepe sint tenetur et et nulla. Dicta non deleniti vitae delectus et modi.
Magni ea quibusdam quos nihil perferendis quisquam nesciunt. Ut neque est autem. Reiciendis dolorem adipisci praesentium id. Quia sint tempore quia culpa quibusdam blanditiis reprehenderit ullam. Eligendi ut nihil hic qui. Dolores aspernatur quia est consequuntur quia pariatur quia.