Goldman Sachs to Cut Its $59B Alternative Assets Exposure

Goldman Sachs’ asset management arm is planning to make significant cuts to its $59bn portfolio of alternative investments, which contributed to the bank’s weak fourth-quarter earnings, according to a report by Reuters.

The report cites Goldman Sachs’ chief investment officer of asset and wealth management, Julian Salisbury, as confirming that the bank is planning to divest the positions over the next few years and replace some of the funds on its balance sheet with outside capital.

Goldman had a difficult fourth quarter of 2022, hugely missing its profit targets as deal-making stalled. The bank’s asset and wealth management posted a 39% drop in net revenue to $13.4bn in 2022, with its revenue from equity and debt investments declined 93% and 63%, respectively, according to earnings announced last week.

The $59bn of alternative investments held on the balance sheet dipped from $68 bn the prior year. The positions included $15bn in equity investments, $19bn in loans and $12bn in debt securities, as well as other investments.

Its reduction in alternative assets follows recent news that the bank is laying off more than 3,000 employees in its biggest round of job cuts since the 2008 financial crisis.