Goldman Sachs may not lose out due to financial reform, newspaper report claims

12 August 2010

The overhaul of financial regulations in the US may not impact Goldman Sachs’ revenue as much as originally anticipated, a newspaper report has claimed.

According to the Los Angeles Times, the investment bank was originally expected to be one of the financial institutions to suffer most following the recent passing of the Dodd-Frank act.

The newspaper cited estimates from analysts which suggested up to a tenth of the firm’s revenue could be lost following the signing off of the legislation.

However, although the changes may not come into effect for some years, Goldman Sachs has already started to make alterations to its infrastructure to pre-empt the legislative shift.

The bank is thought to have begun moving staff from its proprietary trading desk to other departments within its organisation.

Jim Sinegal, a bank analyst at Morningstar Inc, told the newspaper: “They've clearly seen the writing on the wall and are planning their moves ahead of time. It's definitely a little sooner than I expected.”

Under the new legislation recently passed by the US government, financial institutions will not be allowed to conduct proprietary trades.

The changes will also limit banks to only investing up to three per cent of their total capital in either private equity or hedge funds.

By Jim Ottewill

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