Goldman bets on derivatives

DERIVATIVES activities generated up to a third of Goldman Sachs’ revenues last year, according to figures handed to the US Financial Crisis Inquiry Commission (FCIC).

Goldman derived between $11.3bn (£7.1bn) and $15.9bn of its $45.2bn net turnover from derivatives-based businesses in 2009, a source close to the bank confirmed. At the upper end, the amount would represent 35 per cent of Goldman’s revenues.

Goldman is among several Wall Street behemoths which have been asked to provide details of their derivatives franchises to the FCIC.

An FCIC spokesperson said: “This is information we have asked for because it’s important to get a sense of these institutions’ derivatives operations. The banks have all assured us they will get us that information.”

The use of derivative instruments such as credit default swaps is one of 22 areas being examined by the commission in the wake of 2008’s banking sector meltdown. Other topics of interest include short-selling, lending and securitisation and abuse of consumers in the mortgage market.

The FCIC’s next public hearing on 1 September will examine the issue of institutions being “too big to fail”. It is not yet known which banks will be represented at the session, a spokesperson said.

The news came as Goldman said it endured 10 days of trading losses in the second quarter. Losses at Goldman’s trading desks topped $100m on three of those days, according to a filing with the US Securities and Exchange Commission, ending a three-month clean sheet.

However, the bank made at least $100m on 17 other days during the three months to 30 June.