Goldman Sachs Group Inc lost more than $1 billion (617.70 million pounds) on currency trades during the third quarter, regulatory filings show, offering some insight into why the firm, considered one of Wall Street's most savvy traders, reported its worst quarter in a key trading unit since the financial crisis.
Foreign exchange was the only trading area that was a money loser, according to regulatory data issued in November. In the third quarter, Goldman reported its weakest revenue - $1.3 billion - in fixed-income, currency and commodities trading since the height of the financial crisis.
The data, which come from regulatory filings with the U.S. Securities and Exchange Commission and the Federal Reserve, are reported in aggregate and do not always reflect the way banks tally up their own profits and losses on trading desks.
In a statement on Thursday, Goldman Sachs said that the numbers in regulatory filings "are not representative of the manner in which the firm manages its business activities." According to Goldman's internal calculations, it did not suffer a loss in its currencies trading business in the third quarter.
Goldman's trading businesses book profits and losses only on trades that originate within them. Profits and losses from currency trading transactions that originated in another division, and are paired with other kinds of trades, are attributed to that division.
"Accordingly, gains or losses in one product type frequently offset gains or losses in other product types," Goldman said.
According to SEC data, Goldman had negative revenue of $1.3 billion in currencies, while JPMorgan Chase & Co was $65 million in the red. Morgan Stanley reported $594 million in currency revenue, Citigroup Inc reported $558 million and Bank of America Corp reported $215 million.
Goldman's 47 percent drop in fixed-income, currency and commodities revenue last quarter surprised not only its investors but traders at rival firms, because it is typically one of the best trading firms on Wall Street. In research notes following Goldman's results, analysts said they considered it a one-time event and not indicative of broader problems.
Source: Reuters
