Goldman Sachs Group slashes quarterly profit 85% with 1MDB legal charge

Goldman Sachs Group boosted litigation reserves by $2.01 billion after agreeing with Malaysia to resolve probes into the US bank’s role in a scheme to plunder the nation’s 1MDB investment fund.

The additional provision cut the firm’s previously announced second-quarter profit by 85 per cent, the bank said Friday in a filing. Goldman said last month that the Malaysia settlement would “materially increase” the $945 million it had already set aside in the quarter.

The charge wipes out what had been a surprise jump in profit fueled by trading gains, but it also marks progress in the investment bank’s efforts to resolve its worst scandal since the financial crisis. The firm has long been in discussions on a separate settlement with the US Department of Justice over 1MDB, and a deal could be announced as soon as this month.