Right preference

20 Oct 2010 By Antony Currie Follow @AntonyMCurrie

The Sage of Omaha s $5 bln investment bolstered the Wall Street firm during the crisis. But the 10 pct dividend is pricey, and the prefs soon won t count as core capital. Repaying Buffett would be a smarter use of Goldman s spare cash than share buybacks or a bigger dividend.

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David Viniar, Goldman Sachs' chief financial officer, said on the firm's thirdquarter earnings conference call on Oct. 19 that Goldman already appears to have more than enough capital to meet Basel III requirements though he cautioned much remains in flux.

Using secondquarter numbers, Viniar said Goldman's Tier 1 common ratio of capital to assets would have been almost 8 percent under Basel III. The measure could hit 11 percent by the end of 2011, Viniar said, under various assumptions about the firm's assets and earnings.

Goldman's assessment of its excess liquidity the surplus of cash and liquid assets over the amount needed for safety jumped by $10 billion to $173 billion at the end of September.

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