Goldman Sachs Traders Lost on Six Days in Second QuarterMichael J. Moore
Goldman Sachs Group Inc., which generated about half its revenue from trading last quarter, posted losses from that business on six days in the second quarter, unchanged from a year earlier.
The bank’s traders made more than $100 million on 10 days in the quarter ended June 30, compared with four days in the year-earlier period, the New York-based company said in a regulatory filing today. While the largest one-day loss was between $75 million and $100 million, none of the firm’s losses topped its value-at-risk estimate.
Goldman Sachs generated $4.31 billion from its trading division in the second quarter of 2013, an increase of 11 percent from the year-earlier period. The total was down from the first quarter amid a drop in bond prices sparked by indications that the Federal Reserve may ease economic-stimulus measures.
“Macro concerns emerged again toward the end of the quarter and were reflected in lower activity levels and risk appetite in certain businesses,” Chief Financial Officer Harvey Schwartz said on a conference call last month. “In addition, the market volatility created more challenging periods within the capital markets for managing client flows.”
Bank of America Corp. lost money on seven days during the quarter, including a $54 million misstep on one of them. Morgan Stanley posted losses on 12 days, including one that topped $50 million, while Wells Fargo & Co. reported five negative days. Citigroup Inc. doesn’t disclose money-losing days.
Schwartz said last month that difficult conditions in June had begun to abate in July, and that clients may change their focus to economic data rather than speculating on the Fed’s actions.
“For a very long period of time, I think there was an expectation that this unusual low-rate environment would persist,” Schwartz said. “Now that we might be entering a different regime, you’ll see people probably respond more to data.”
Goldman Sachs also disclosed today that it’s “reasonably possible” legal losses could be as much as $3.5 billion more than the firm has reserved for such litigation. That was unchanged from the March 31 figure.