Goldman Sachs would have $728bn in risk- weighted assets under new capital rules, a 67% jump from the amount it had under earlier regulations.
Bloomberg reports that the investment bank plans to cut the figure to $700bn by the end of next year, CEO Lloyd C. Blankfein, 58, said Tuesday at an investor conference in New York sponsored by Bank of America Corp.’s Merrill Lynch unit. About $18bn of the reduction will come from cutting credit risk, and $11bn from market risk, Blankfein said in his seventh straight appearance at the annual event.
The comments mark Goldman Sachs’s first public estimate of how new Basel III rules have increased the risks the firm must assign to its assets, a factor in determining the size of the company’s capital buffer. While larger banks such as Citigroup Inc. and JPMorgan (JPM) Chase & Co. face a smaller jump in RWAs, they will have to hold more capital against those assets based on their size and business mix.
'For more than a decade, larger size and complexity were viewed entirely as synergistic and virtuous', Blankfein said.'For the first time it’s clear that size and complexity come with a higher cost'.
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