Tags: WSJ Goldman Sachs May Repay 5 Billion to Warren Buffett

WSJ: Goldman Sachs May Repay $5 Billion to Warren Buffett

Thursday, 21 Oct 2010 08:08 AM

Goldman Sachs Group Inc. may repay a $5 billion investment from Warren Buffett’s Berkshire Hathaway Inc. that boosted the bank during the 2008 financial crisis, The Wall Street Journal reported, citing unidentified people.

Goldman Sachs has the option of paying $5.5 billion to redeem the shares, although that would trigger a charge of $1.6 billion and need approval from the U.S. Federal Reserve, the newspaper said. Edward Naylor, a spokesman for Goldman Sachs in Hong Kong, declined to comment.

Berkshire’s investment in September 2008 reassured investors and allowed Goldman Sachs to raise another $5 billion the following day, according to the newspaper. Goldman Sachs is considering using some of its $173 billion in “excess liquidity” to repay Berkshire, the Journal reported.

Annual dividends of 10 percent on Berkshire’s preferred Goldman Sachs shares have cost the investment bank about $1 billion, the equivalent of more than $1.3 million a day, the newspaper reported. Funding from debt markets has become cheaper since the crisis, and Goldman Sachs would be able to replace the capital, the Journal said.

Repaying Berkshire’s investment would also lift restrictions that prevent Goldman Sachs Chief Executive Officer Lloyd Blankfein and other executives from selling more than 10 percent of their shares in the firm, according to the report. That curb was requested by Buffett at the time of the deal, the newspaper reported.

It’s not clear whether executives at the New York-based bank have sought approval from the Federal Reserve for repaying Berkshire, the Journal reported.

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Goldman Sachs Group Inc. may repay a $5 billion investment from Warren Buffett s Berkshire Hathaway Inc. that boosted the bank during the 2008 financial crisis, The Wall Street Journal reported, citing unidentified people. Goldman Sachs has the option of paying $5.5...
WSJ Goldman Sachs May Repay 5 Billion to Warren Buffett
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2010-08-21
Thursday, 21 Oct 2010 08:08 AM
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