Goldman to buy $50 bn bank assets

LONDON: Having opted to become a commercial bank, Goldman Sachs is planning to acquire up to $50 bn in assets from the ailing American banks, say media reports.

Quoting Goldman executives, the Financial Times said, ���Goldman Sachs is seeking to acquire up to $50 bn in assets from ailing US banks as part of its push into commercial banking.���

Earlier this month, global financial services provider Goldman Sachs and Morgan Stanley became bank holding companies, and come directly under the purview of the Federal Reserve, a move that entails stricter regulations for the previously lightly regulated investment banks.

���Goldman is moving quickly to profit from its push into traditional banking by expanding the activities of its Utah industrial loan corporation , a kind of bank that is regulated by authorities in that western US state,��� Financial Times reported.

Goldman also plans to talk to US regulators to identify up to $50 bn in assets it could buy from troubled lenders. These, too, would be put under the Utah bank, the daily added.

The Utah bank of Goldman, has about $20 bn in deposits and $25.7 bn in assets.

Goldman is moving to shift $150 bn of assets to the balance sheet of the Utah bank. These would include loans to private clients and other assets that would be found more typically at a traditional commercial bank.

This move shows Goldman���s determination to acquire cheap assets and potentially ailing banks even as it reduces its leverage as it transforms itself into a bank holding company, Financial Times added.

���The bank has the luxury of being proactive because it has already been shedding problem assets,��� FT said quoting Goldman chief financial officer David Viniar.

Goldman has a mere $8 billion in securities backed by commercial mortgages. If it sells these securities today, it would be likely to record a gain, a newspaper said quoting officials.

The daily further added that Goldman has reduced its holdings of loans backing private equity deals from $52 billion to $8 billion. Besides, last week it raised $10 billion in capital, including $5 billion from Warren Buffett.