Goldman Sachs Profits Over $100 Million from Purchase of SVB Securities
Goldman Sachs (GS) has reportedly made over $100 million from buying a portfolio of securities from Silicon Valley Bank (SVB) before the bank was shut down by the FDIC.
SVB Financial (NASDAQ:SIVB) disclosed last Wednesday that it sold substantially all of its available for sale (AFS) securities portfolio, resulting in an after-tax loss of ~$1.38B in Q1, and planned to offer $1.25B of stock and $500M of preferred depositary shares in public offerings, moves intended to boost the company's liquidity.[0]
The portfolio, which had a book value of $23.97 billion, was sold to Goldman Sachs for $21.45 billion, according to a filing with the Securities and Exchange Commission (SEC). SVB said the transaction would result in an after-tax loss of $1.8 billion.[1]
On Wednesday, a source close to the situation informed Yahoo Finance that Goldman Sachs acquired “highly liquid” securities from SVB at arm's length and under market terms.[1] Silicon Valley Bank sought advice from Goldman Sachs as it attempted to secure capital in a rush.[0]
The New York Times Dealbook reported that Goldman Sachs is likely to make more than $100 million for purchasing the portfolio of securities. This is despite the fact that the bank booked the transaction at a loss of $1.8 billion.[0]
It is clear that Goldman Sachs stands to gain significantly from the purchase of SVB’s bonds. While it is not known yet exactly how much the bank will make from the transaction, it is certain that Goldman will benefit from the deal.
0. “Goldman expected to make $100M from buying Silicon Valley Bank debt last week – report” Seeking Alpha, 15 Mar. 2023, https://seekingalpha.com/news/3947672-goldman-expected-to-make-100m-from-buying-silicon-valley-bank-debt-last-week-report?source=feed_symbol_gs
1. “Goldman Revealed as Buyer of SVB Securities That Led to Loss” finews.com, 15 Mar. 2023, https://www.finews.com/news/english-news/56238-goldman-sachs-was-buyer-of-svb-securities-that-led-to-loss
