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Goldman Sachs Traders Had 15 Losing Days in 3rd Quarter

Goldman Sachs Group Inc. (GS), which had the steepest drop in trading revenue among Wall Street’s largest banks, posted losses from that business on 15 days during the third quarter, the most since 2011.

Traders made more than $100 million on four days in the three months ended Sept. 30, down from seven days in the year-earlier period, the New York-based company said in a regulatory filing today. None of the losses were more than $50 million and none topped the bank’s so-called value-at-risk, an estimate of potential trading losses.

Goldman Sachs generated $2.86 billion from its trading division in the third quarter, a 32 percent decrease from the year-earlier period. Client activity fell and the firm struggled to manage inventory amid speculation about whether the Federal Reserve would ease its economic stimulus.

“Concerns about the global economic outlook created a more difficult operating environment for our clients in the third quarter,” Chief Financial Officer Harvey Schwartz said on a conference call last month. “These challenges were amplified by the seasonal slowdown traditionally impacting client activity in July and August.”

The firm’s inventory fell to $244.3 billion, a 25 percent drop from a year earlier and a 12 percent decline from the end of the second quarter. The was the biggest decline and the lowest absolute amount since the bank started disclosing the figure at the end of 2010.

The number of days with losses was the highest since the firm had 17 such days in the fourth quarter of 2011. The four days of gains of more than $100 million were the fewest since the second quarter of 2012. Goldman Sachs hasn’t had fewer than four such days in a quarter since 2005.

Bank of America Corp. posted daily losses twice during the quarter, including a $21 million misstep. Morgan Stanley posted losses on seven days, including two that topped $25 million.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editor responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net

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