Goldman Sachs foresees an additional $2.3 billion in potential losses arising from legal conflicts.
Posted on Mar 14, 2023 at 04:03 PM
According to a regulatory filing by Goldman Sachs Group Inc (GS. N) on Friday, 24th Feb 2023, the investment bank is anticipating potential losses of $2.3 billion from legal proceedings that exceed the reserves set aside for such matters last year. This estimate is consistent with the bank's projections at the end of the third quarter in September but is greater than the $2 billion loss anticipated in 2021. Goldman was the subject of various lawsuits, including its involvement in Malaysia's 1MDB sovereign wealth fund scandal and the failure of Archegos Capital Management in 2021.
Later this year, the Wall Street bank is expected to face trial for a long-standing gender bias lawsuit that accuses the company of pervasive discrimination against women regarding pay and promotions.
In addition, Goldman Sachs has stated that it is collaborating with the Consumer Financial Protection Bureau (CFPB) and other governmental entities to address investigations and inquiries related to the bank's management practices of U.S. credit card accounts.
While Goldman Sachs had previously acknowledged the Consumer Financial Protection Bureau's (CFPB) investigation in its previous regulatory filing, the most recent filing implies that other governmental organisations are also conducting inquiries. However, the company did not specify which other entities were involved.
Goldman Sachs also revealed in the filing that it had authorised a $30 billion stock buyback program in February.
This announcement precedes an important investor day. CEO David Solomon is anticipated to outline strategies for achieving crucial financial objectives after experiencing setbacks that prompted Goldman to scale back its ambitions for its consumer banking division, Marcus.
Following a challenging year in which financing became scarce, and companies deferred plans for mergers and acquisitions, investment banks anticipate a resurgence in deal-making in the second half of 2023 as the Federal Reserve relaxes its rate-hike cycle.
To reduce expenses, Goldman Sachs recently announced that it would reduce its workforce by 3,200 jobs, which accounts for 6% of its staff.
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