“NEW YORK (Reuters) – Goldman Sachs Group Inc has slashed its capital pledges to investment fundsby nearly half since the Volcker rule was signed into law in 2010, as it prepares its principal investment business for restrictions on investing its own money, according to regulatory filings.
The Wall Street bank has reduced future commitments to hedge funds and funds that invest inprivate equity, credit and real estate, by $5.8 billion since June 2010, the last period before the Volcker rule was included in the Dodd-Frank financial reform act. That represents a reduction of 48 percent, according to data in filings with the U.S. Securities and Exchange Commission.
The Volcker rule – which has not yet been finalized or implemented – will prevent banks from investing more than 3 percent of Tier 1 capital in hedge funds or private equity funds, or from contributing more than 3 percent of capital from those funds.
Goldman’s existing hedge fund and private-equity fund holdings represented 14 percent of its Tier 1 capital as of March 31, according to its most recent filing on Thursday. Including future private-equity fund commitments, that ratio goes up to 17 percent.
It is not clear how the Volcker rule will treat credit funds or real-estate funds, or how much time banks will get to come into compliance with the law. Regulators are expected to release a final rule by the end of this year, after reviewing hundreds of letters from industry groups and the public about a proposal they released in October 2011….”
If you enjoy the content at iBankCoin, please follow us on Twitter
