[Wikinvest 자료] Goldman Sachs Group

자료: http://www.wikinvest.com/stock/Goldman_Sachs_Group_(GS)

Goldman Sachs (NYSE: GS) is a U.S. bank holding company which is particularly know[n] for its investment bank arm. Goldman Sachs [:]

1. advises corporations on mergers and acquisitions,
2. offers trading services, and
3. manages the assets of large institutions, governments, and wealthy individuals.
4. Goldman Sachs also uses its own capital to engage in long-term [investments](private equity) and short-term investments ([propriety??? (proprietary) trading]).

Goldman had the distinction of being the oldest and most reputed pure play investment bank in the world, but became a bank holding company on September 21, 2008. Even though Goldman Sachs was not directly hurt by the subprime crisis, the banks stock price per share fell and the company incurred losses due to a drop in the overall market.

• The new holding bank status allows the company to run commercial banking operations and gives its depositors insurance through Federal Deposit Insurance Corporation (FDIC). Deposits, in turn, allows Goldman Sachs to reduce its leverage ratio and hence reduce the risk of bankruptcy.[1]
• Goldman Sachs also accepted $10B under the Troubled Assets Relief Program (TARP). In an attempt to protect itself from increased government regulation, Goldman Sachs applied and received permission to repay the $10B TARP loan.[2][3]
• In addition, as a holding bank, Goldman faces more regulation than it previously faced. [4] Goldman Sachs had accomplished its high returns in the past by taking greater risk in terms of capital risk. However, as a holding bank, it is not allowed to take on such risk and so its future performance may be impacted.[5]

History and Business Overview[edit]

Goldman Sachs is a holding bank with a strong global investment bank. Although the company was originally a stand alone investment bank, it added a holding bank in order to gain access to various government support programs during the 2008 financial crisis. Goldman Sachs offers services to a variety of customers including government agencies, high net work individuals (HNI), financial institutions, and corporations.[6]

GS has frequently performed above the market, but it reported a loss in the fourth quarter 2008. This was its first quarterly loss in in its history since going public in 1999.[7] Because of these losses and the overall market condition, Goldman Sachs accepted $10B in capital injection under the Troubled Assets Relief Program (TARP). On September 23, 2008 the company received $5 billion in equity investment from Berkshire Hathaway (BRK) and announced that it plans to raise another $10 billion from other investors. The company expects that these capital infusions will ease concerns about bankruptcy. In April 2009, GS also sold $5.75B in stock and $2B in 5 year debt.[8] This most recent sale of stock has been in hopes of raising enough money to pay off the TARP loans and free itself of excess regulation.

Net Revenues Data, in millions	FY2005	FY2006	FY2007	FY2008[9]	Q12009[10]	Q2 2009
Investment Banking		$3,671	$5,629	$7,555	$5,185	$823	$1,440
Trading & Principal Investments		$16,818	$25,562	$31,226	$9,063	$7,150	$9,322
Asset Mgmt&Securities Services		$4,749	$6,474	$7,206	$7,974	$1,450	$957
	Total Net Revenue	$25,238	$37,665	$45,987	$22,222	$9,425	$13,761
Operating Expenses		$16,965	$23,105	$28,383	$19,886	$6,796	$8,732
	Pre-Tax Earnings	$8,273	$14,560	$17,604	$2,336	$2,629	$5,029

The company's operations can be broken down into three main segments - Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services.

I. Investment Banking (23.3% of 2008 revenue; 87.4% of 2008 earnings)[11][edit]

The Investment Banking Division (IBD) advises large institutions on mergers and acquisitions in addition to assisting them in raising money through debt and equity issuance. The company also underwrites IPOs. Clients include financial institutions, institutional investors, large corporations, and governments.[12]

• Within the Investment Banking Division, the Financial Advisory component is in charge or[of??] mergers and acquisitions and financial restructuring advising. In 2009, Goldman was replaced by J P Morgan Chase (JPM) as the number one ranked global adviser on mergers and acquisitions in terms of transaction volumes. Although Goldman has lost its number one spot, the entire market activity for mergers has greatly dropped by 53% from 2007 to 2008.[13]
• The underwriting component in Investment Banking is in charge of equity and debt underwriting. Although it is not as highly ranked, as the financial advisory component, underwriting still has a substantial reputation. Underwriting decisions are typically made by CFOs, and Goldman's relationships in this area are not quite as extensive as with CEOs.

Although only 23% of Goldman's revenue comes from investment banking, the impact of this segment reaches far beyond its measurable revenue contribution. Goldman is the most effective of the major investment banks when it comes to leveraging its relationships to cross-sell additional services to its clients. It is estimated that investment banking is indirectly responsible for an additional 10% of Goldman's revenues.

II. Trading & Principal Investments (40.8% of 2008 revenue; -117.5% of 2008 earnings)[11][edit]

This division generates over 40% of Goldman's revenues. This division both facilitates trades on behalf of clients and invests Goldman's own capital using various debt and equity instruments. The segment experienced severe losses due mainly to a $3.1B loss in corporate debt and private equity and a $3.1B loss in residential and commercial mortgages. There are three subdivisions in the Trading & Principal Investments segment:

• Fixed Income, Currency, & Commodities (FICC) :
  This subdivision [:]
  (1) facilitates trades in the aforementioned areas.
  (2) Goldman seeks opportunities to profit through the movements of interest rates and credit products.
  (3) Other instruments traded in this group include: asset-backed securities, securitized loans, currencies, and commodities (ex: oil, corn, or chocolate futures).
• Equities:
  As its name implies, this division specializes in facilitating equity trades. This segment is also heavily involved in proprietary trading and derivatives. Goldman, along with its competitor Morgan Stanley, is a leader in electronic equities trading. Over the last decade, there has been a move toward electronic trading. Electronic trading eliminates the need for specialists, or people physically executing trades on stock exchange floors, and carries significantly smaller commissions than traditional trading. Goldman is unique in that it has embraced this trend, investing in making its operations as efficient as possible. In addition, the equities subdivision sells insurance and reinsurance from a variety of activities.[14]
• Principal Investments Area (PIA):
  PIA engages in merchant banking activities and private equity ventures. PIA makes investments in other corporations, as well as in real estate. As of 2008, the segment had investments in corporate and real estate valuing $15.13B.[15] In addition to managing the firm's own investments, PIA is partially owned by limited partners, institutions, and high-net-worth clients, who earn a portion of the group's returns. Goldman Sachs is one of the few investment banks to maintain a separate private equity division. GS PEG, the so called private equity group, competes with KKR, the Carlyle Group and TPG, among others, in private equity.

III. Asset Management & Securities Services (35.9% of 2008 revenue; 129.9% of 2008 earnings)[11][edit]

Goldman's asset management division manages assets for large institutional investors such as pension plans, endowments, and trusts. Unlike most full-service investment banks, Goldman Sachs also provides loans to hedge funds through its Prime Brokerage business.

Goldman's asset management business is distinct in that alternative assets compose a relatively high percentage of its assets under management relative to its peers. Investors wishing to gain exposure to alternative assets, which include investment vehicles such as hedge funds and private equity, can do so through Goldman's asset management services. Goldman is also second in prime brokerage, having entered the market earlier than most of its competitors. (중략/abbr.)