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| Goldman Sachs boosts risk-taking on Wall St |
| Bloomberg / New York Apr 28, 2009, 00:57 IST |
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Goldman Sachs Group Inc, unbowed by the securities industry's worst year since the Great Depression, increased its trading bets at the fastest rate on Wall Street.
Goldman Sachs's so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 per cent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 per cent in the same period at JPMorgan Chase & Co and dropped 14 per cent at Credit Suisse Group AG.
Offence beat defence in the first three months of 2009 as Goldman Sachs reported record revenue of $9.4 billion, dwarfing Morgan Stanley's $3.04 billion. Since Goldman Sachs and Morgan Stanley, the two biggest US securities firms, converted into banks in September, Morgan Stanley Chief Executive Officer John J Mack has reduced proprietary trading and principal investing to focus on the firm’s role as a financial adviser and broker.
“What stands out to me isn't so much that Goldman had a blow-out quarter, it's that Morgan Stanley had a disappointing quarter,” said Jeffery Harte, an analyst at Sandler O'Neill & Partners LP in Chicago, who has a ‘hold’ rating on both firms.
Morgan Stanley posted a $177 million loss in the first quarter and slashed its dividend by 81 per cent after real estate and debt-related writedowns. By contrast, Goldman Sachs, led by Chief Executive Officer Lloyd C Blankfein, reported better- than-estimated earnings of $1.81 billion in the same period.
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