Hey presto!

15 January 2003

In return, the investment bank will get a big role in restructuring Sumitomo’s loan portfolio and access to its balance sheet. That will help reduce the handicap Goldman faces visavis investment banks with rich commercial bank parents.

This content is for Subscribers only

Context News

Goldman Sachs will invest $1.3bn in Sumitomo Mitsui Financial Group and receive lending guarantees from Japan's secondlargest bank that will boost its ability to provide funding to global clients.

Goldman will buy 150.3 billion yen of preferred securities that pay annual interest of 4.5% and can be converted into shares in two years. Sumitomo Mitsui agreed to cover at least $1bn of any losses that Goldman has on loans it makes to investmentgrade customers.

Sumitomo Mitsui gets funds it needs to satisfy regulators it has sufficient capital to cover loan losses. For Goldman, the loan guarantees may help it compete with Citigroup and J.P. Morgan which can use their commercial banks to lend funds to investment banking clients.

Email a friend

Please complete the form below.

Required fields *