Wall Street critic Warren Buffett gets 2% of Goldman Sachs
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Wednesday 27 March 2013
Warren Buffett, the American investor who in the past has criticised the casino culture that pervades Wall Street, is set to become one of the leading shareholders in Goldman Sachs, the investment bank he backed by taking a stake during the financial crisis. And he won't even have to spend a penny of his own money.
Back in 2008, Buffett's Berkshire Hathaway conglomerate invested billions of dollars in Goldman and in return received warrants allowing it to buy around 9 per cent of the bank for $115 per share by October 2013. Yesterday, however, Goldman said Berkshire had instead agreed to exchange its potential profit on the warrants for the bank's stock, meaning that it wouldn't have to dip into its cash reserves to become a sizable shareholder with around 2 per cent of Goldman. That would make it – and Mr Buffett – the bank's ninth largest shareholder. "We intend to hold a significant investment in Goldman Sachs," Mr Buffett said yesterday.
The investment adds Goldman to a share portfolio that, despite Mr Buffett's often vocal calls for a realigning of what he once called "unbalanced incentives" on Wall Street, already includes Wells Fargo, Bank of America and the smaller though still sizable M&T Bank.
Recently he has gone on record to defend institutions that he believes have attempted to roll back the excesses and, in the years since the crisis, sought to build up their capital buffers. "The banks will not get this country in trouble, I guarantee it," he told the Bloomberg financial news service earlier this year. "The capital ratios are huge, the excesses on the asset side have been largely cleared out." He added: "Our banking system is in the best shape in recent memory."
- 1 Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
- 3 A pint of water every day is the key to losing weight, scientists say
- 4 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
Nazi gold train: 'Significant' discovery made in Poland
Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Carol Vorderman reveals she is 'covered in burns' after she fell off her treadmill while running naked
TTIP controversy: The European Commission and Big Tobacco accused of cover-up after heavily redacted documents released
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
iJobs Money & Business
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...
£25000 per annum + benefits: Ashdown Group: A large financial services company...
£20400 per annum: Ashdown Group: An established and highly reputable organisat...