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Goldman Announces Change In Reporting Units, Split Of "Trading And Principal Investments" Group
For nearly two years Zero Hedge (and others) have badgered Goldman Sachs for being purposefully opaque in its reporting structure to not allow any transparency in the split between flow and prop trading revenues, instead lumping everything into the ubiquitous "Trading and Principal Investments" segment of which FICC (fixed income, currency, commodity) has always been the dominant vertical for the taxpayer sponsored hedge fund. This is about to change. In a just released 67 page report titled Report of the Business Standards Committee, Goldman announces that going forward this key trading group will now be split into two separate segments: "Institutional Client Services" and "Investing & Lending" which will provide much more detail on how the firm determines its trading revenue, and will allow objective, third party analysts to determine just how much risk the firm takes on from both a principal (taxpayer funded) and agent (dumb mutual fund money) capacity, something which should have been the case long ago, and which we railed about for two years now. We are happy that our railing on this most important topic has been met with success.
Goldman org chart before:
And after:
Here is Goldman's clarification on the new breakdown:
The four proposed business segments are:
Investment Banking: This segment will include the firm’s revenues from its activities as an advisor together with its debt and equity underwriting activities and revenues associated with derivative transactions directly related to an advisory or underwriting assignment.
Institutional Client Services: This new segment will include the firm’s revenues from client execution activities related to making markets in various products, which form an important part of the firm’s client franchise businesses. These activities are currently included in the Trading and Principal Investments segment. Institutional Client Services will also include the firm’s Securities Services business, which, under the existing segment construct, is aggregated into the “Asset Management and Securities Services” segment.
Investing & Lending: This new segment will include the firm’s revenues from investing and lending activities across various asset classes, primarily including debt and equity securities, loans, private equity and real estate. These activities include both direct investing and investing through funds. Under the existing segment construct, these activities are currently included in the Trading and Principal Investments segment.
Investment Management: This new segment will include the firm’s fee revenues earned in connection with its asset and wealth management businesses, including Goldman Sachs Asset Management (GSAM), Private Wealth Management and the firm’s merchant banking funds. In addition to management and incentive fee revenues, this segment will also include transaction revenues related to the firm’s Private Wealth Management business, including commissions and spreads.
There is some other fluff in the report, but most of it is irrelevant.We look forward to reading the first adjusted quarterly financial statements following the rearrangement of the firm.
Full report (pdf):
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Amen
Yeah, right....
Those guys are probably still twittering back and forth on their Blackberries.
"Hey, we need to sell some Lennar stock, and several of our biggest clients are short the stock. How about upgrading the homebuilders tomorrow?"
Wake me up for the perp walks...the vampire squid is on my 'lower than dung beetle excrement' list until then.
Wonder if Goldman downgraded the education stocks yesterday? They must have known about APOL's earnings today, its up $3.00 pre-market.
Classic "Shank and Crank" job on that sector.
T'wasn't it just a short while ago they'd stated that there was no waythat they could separate the two business flows, nor had the financial acumen to separate out the profits from the different product lines/efforts?
Uh-huh.
Wonder if the new, formal approach to care and nurturing of clients, er I mean counter-parties, will suggest warming the KY before rough insertion.
A miracle a day keeps the regulator away.
Nvida, Mips, Spreadtrim, ArmHoldings .... Gold.
BTW is Goldman still a "bank"?
I would like to open a passbook savings account for my grandson. I have $38.75 in quarters to start. Whom do I talk to?
Uh Oh...
BEIJING (Reuters) – North Korea is becoming a direct threat to the United States and could develop an inter-continental ballistic missile within five years, U.S. Secretary of Defense Robert Gates said on Tuesday.
Principal Investments Group, the Original PIG?
What's the big deal? Like this will reveal something that they may want to hide?
Distraction for people focussed on details while the big picture burns.
ORI
http://aadivaahan.wordpress.com
Org chart looks messy. I bet it morphs into something else within a year.
Could Goldman be changing its ways
By showing its riskier plays
Or just more Goldman spin
So their clients still win
While the American taxpayer pays
The Limerick King speaks.
BTW could we stop saying the taxpayer "pays"? Just look at the total tax collected from Joe and Jane taxpayer compared to the budget. We aren't even paying half the freight now. Does anyone expect "the taxpayer" to pay any more of it later?
The government is doing what Americans were taught to do. Run the credit cards up, then roll it over to the longer term house debt and repeat. I can't wait to see what happens when interest rates go higher.
Good point CD...the following is more appropriate I think...
Could Goldman be changing its ways
By showing its riskier plays
Or just more Goldman spin
So their clients still win
While the American middle-class pays
Long live The Limerick King. :>)
(genuflecting)
I am not worthy, O Limerick King
My liege is a footlong and I an inchling
Each reader must know it
O ZeroHedge Poet
Our joy in your wordplay's the thing
Tyler-
Goldman couldn't give two shits about it's public image and never does anything voluntarily unless they know they can make more money doing it. So I ask: what's the angle here? I admit I don't know enough about how these firms operate to see or understand how we're about to get screwed, but knowing Goldman, we are about to get screwed.
It's a kinder, gentler evil shyt sucking squid
As always, you have a happy talent for composition and a remarkable felicity of expression. I bow to you rhetorical skill.