Goldman provides us (U.S) with a 23% Return!
Goldman Sachs became the first major bank to buy back warrants held by the US Treasury on Wednesday, allowing the group to shake off the last vestige of its participation in the government bail-out programme after just nine months.
Goldman paid $1,1bn to the US Treasury to buy back the warrants. which were granted as part of the government’s $10bn investment of troubled asset relief programme funds in the bank last year.
The bank paid back the Tarp funds last month, along with several other financial institutions that were deemed to be in good health following the government-run “stress tests”.
Goldman began negotiating to buy back the warrants several weeks ago, said a source familiar with the matter, and agreed to a deal on Wednesday after trying unsuccessfully to talk the Treasury down from its asking price of $1.1bn.
Assigning a value to the warrants has been a source of contention for the financial institutions seeking to buy them back. JP Morgan Chase has said the Treasury would sell its warrants at a public auction after the two sides disagreed over how to price them.
The government said it had earned an annualised return of 23 per cent from its investment in Goldman.
via FT.com / Companies / Banks – Goldman sheds bail-out legacy.
Goldman Sachs
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