Citigroup has lost $ 5 billion in the past. Merrill Lynch and Lehman Brothers have been shaken. Bear Sterns is bankrupt and JP Morgan doesn't look good either (sitting on a huge Bear Sterns liability). So how did Goldman Sachs beat everyone's expectations and come out on the top??? Read on......
- Dented competition: With the virtual closing of Bear Sterns, Goldman Sachs profited from reduced brokerage competition. It also made a lot of hard cash by earning fees while raising capital for banks and financial institutions hit with large credit losses.
- Formidable Risk Management: With arguably the best risk management department in Wall Street, Goldman executives trumped all others by avoiding exposure to subprime loans and bad debt write-downs. They gave the industry's smallest loss on that count : a mere $775 million as against $2 billion expected by analysts.
- Volatile and Tough Markets: "When the going gets tough, the tough get going." An unpredictable future and a turbulent recession-hit financial market compelled Goldman Sachs to out-think its competitors and that is exactly what they did perfectly!
- Perfect strategy: CEO Lloyd Blankfein made use of different revenue streams and the broking,investment banking, risk management dept, and trading businesses to make money even in a credit crunch/credit crisis. During the credit crunch, instead of worrying about capital, they earned huge fees by arranging capital for other credit-hit companies and financial institutions.
This fresh news comes at a time when everyone is seeing red. Lets see what others have to speak about these results here!