Goldman Sachs believes that it is slow in India

By George Alexander and Ruth David Smith

In India, economic expansion led mergers and stock Records offerings last year. Goldman Sachs (GS), which is exercised to take advantage of the boom, progress can be slow and take advantage of the elusive deals.

CEO Lloyd c. Blankfein said that Goldman wanted to "be Goldman Sachs more place." That was not easy in India. The company does not have the licenses required for trade in the currency and to guarantee the obligations of the Government. India companies are reluctant to pay for advice on mergers. Banks accept tiny taxes to take public State enterprises because they want to build goodwill with the Government and the advance in the classification of the case. First part of sale of Goldman in the country this year may be a 1.3 billion offering of the Ministry of Finance of power belonging to the State, scheduled for may, for which it will be divided a symbolic amount of 1 rupee (2 ￠) with three other banks, according to two people with knowledge of the case. The Bank also accepted year last to handle the sale of shares for Power Grid Corp., belonging to the State of the India for about 4 ￠ fee. "This is an extremely competitive market," says Manisha Girotra, the CEO of UBS (UBS) the India operations. "Everyone here is because the promise is enormous."

To stimulate business, Goldman Sachs named Sonjoy Chatterjee, 42, President of the operations of the India in March. Chatterjee, who joined in June last as co - CEO of ICICI Bank, an second lender in the country, is the first Indian banker to lead the firm in the country, since it ended in a joint venture with Kotak Mahindra Bank in 2006. Vijay Karnani, a Goldman Sachs of 13-year veteran, was promoted to co - CEO with Chatterjee.

In the ranking for 12 months, Goldman Sachs rose to no. 2 in mergers and acquisitions and 13 by organizing sales of local shares, according to data compiled by Bloomberg. That compares to the ninth place in advising on M & A involving Indian companies and 16 to purchase equity in the country within four years from April 1, 2006, just after the company at the end of its partnership with Kotak MahindraBloomberg data show.

The company advance was assisted by his role of Advisor Reliance Industries, led by billionaire Mukesh Ambani, which sold interests in 23 areas of oil and gas in India to BP in February for $ 7.2 billion. The relationship could lead to more work M & A of Goldman Sachs: dependency was undertaken more acquisitive of the India last year, with nine bids totaling $ 2.2 billion, Bloomberg data show.

Freeman & Co., a New York research firm, believes that total investment banking fresh in India were about 1 billion dollars last year, one-fifth of 4.9 billion for China. Annual turnover of Goldman Sachs in India of all its companies is about 100 million dollars, according to a report on 21 March by Guy Moszkowski and Steven j. Chubak, Bank of America analysts. It is a quarter of one percent of 39.2 billion of the Cabinet of incomes in the world last year.

Goldman Sachs is the only headlines foreign firm in India without a commercial banking licence necessary to engage in currency transactions, or permit the Government to take charge of the bonds. Goldman Sachs executives told analysts of Bank of America last month that the company has applied for a licence and that it expects to receive a three to six months, according to the report of. Edward Naylor, a spokesman for Goldman Sachs in Hong Kong, refused to comment, as did Chatterjee.

The India is among the emerging markets that Goldman Sachs while the company faces more restrictive rules in Europe and the United States on how it can deploy capital. The Bank aims to double income Asia outside the Japan "over the next years", to $ 10 billion, analysts of Bank of America wrote. Annual filing of the company with the Securities and Exchange Commission showed that Asia represents 21 percent of income before taxes and 18 per cent of income in 2010. He returned not to disclose or take advantage of the India. Blankfein, "GDP growth and the relative financial stability of many countries in growth are trends that could lead to revenue in the whole of our business opportunities," said a November Investor Conference in New York.

Goldman Sachs has agreed to buy based out of Mumbai Benchmark Asset Management, a provider of common funds and of negotiated Fund, last month. Terms were not disclosed. Assets managed by mutual funds investment more than tripled, to 6.8 billion rupees in the five years that was completed on December 31, according to the Association of the mutual funds of the India.

Chatterjee the trick will be to convince local businesses to pay for advisory work when rival companies are willing to sacrifice a fee to win market share. "Indian customers are very price-sensitive when it comes to costs," explains Joel Perlman, Chairman of London Copal partners, which provides research for investment banks and private equity firms. "The percentage of India costs will remain relatively small."

The bottom line: Goldman Sachs has perhaps had income of approximately 100 million dollars in India last year, a quarter of one percent of the total world.

With Christine Harper. Alexander is a reporter for Bloomberg News. David is a reporter for Bloomberg News.

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Goldman Sachs has misled Congress after deceiving customers, Levin, said

April 14, 2011, 12:03 AM EDT By Robert Schmidt, Clea Benson and Phil Mattingly

(For more on the Levin Report, see EXT2 )

April 14 (Bloomberg) -- Goldman Sachs Group Inc. misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said.

Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value.

The Michigan Democrat also said federal prosecutors should review whether to bring perjury charges against Goldman Sachs Chief Executive Officer Lloyd Blankfein and other current and former employees who testified in Congress last year. Levin said they denied under oath that Goldman Sachs took a financial position against the mortgage market solely for its own profit, statements the senator said were untrue.

“In my judgment, Goldman clearly misled their clients and they misled the Congress,” Levin said at a press briefing yesterday where he and Senator Tom Coburn, an Oklahoma Republican, discussed the 640-page report from the Permanent Subcommittee on Investigations.

Goldman and Deutsche

Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

In a statement, New York-based Goldman Sachs denied that it had misled anyone about its activities. “The testimony we gave was truthful and accurate and this is confirmed by the subcommittee’s own report,” Goldman Sachs spokesman Lucas van Praag said.

“The report references testimony from Goldman Sachs witnesses who repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point,” van Praag said.

‘Divergent Views’

In a statement, Deutsche Bank spokeswoman Michele Allison said, “As the PSI report correctly states, there were divergent views within the bank about the U.S. housing market. Moreover, the bank’s views were fully communicated to the market through research reports, industry events, trading desk commentary and press coverage. Despite the bearish views held by some, Deutsche Bank was long the housing market and endured significant losses.”

The panel’s report also examined the role of credit-rating firms in the meltdown, lax oversight by Washington regulators and the drop in lending standards that fueled the mortgage bubble and ultimately caused hundreds of bank failures.

The subcommittee’s findings show “without a doubt the lack of ethics in some of our financial institutions who embraced known conflicts of interest to accomplish wealth for themselves, not caring about the outcome for their customers,” said Coburn. “When that happens, no country can survive and neither can their financial institutions.”

Final Assessment

The report is likely Washington’s final official assessment of the turmoil beginning in 2007 that froze credit markets, took down investment banks Bear Stearns Cos. and Lehman Brothers Holdings Inc., sent housing finance giants Fannie Mae and Freddie Mac into government conservatorship and caused the worst economic collapse in the U.S. since the Great Depression.

The $700 billion taxpayer bailout that followed in October 2008 upended the relationship between Wall Street and the federal government, turning CEOs like Blankfein and Lehman’s Richard Fuld into political punching bags. Populist anger at high-paid bank leaders helped fuel the passage of last year’s Dodd-Frank law, which set out the biggest changes to financial oversight since the 1930s.

The Senate report comes less than a year after Goldman Sachs paid $550 million to resolve SEC claims that it failed to disclose that hedge fund Paulson & Co was betting against, and influenced the selection of, CDOs the company was packaging and selling.

Goldman Sachs, in its settlement with the SEC, acknowledged that marketing materials for the 2007 CDO deal contained “incomplete information.”

Documents and Footnotes

The Senate subcommittee’s bipartisan report, buttressed by 2,800 footnotes and thousands of internal documents from Goldman Sachs and other firms, may have more impact than previous investigations into the crisis.

It’s an open question whether the Justice Department and the SEC will review its findings. Levin does not have the power to refer the allegations to federal authorities on his own. The subcommittee has a formal process for making referrals, which requires Levin to get the support of Coburn before making an official referral. Levin is going to recommend that the subcommittee make referrals, though he has not done it yet, staff members said.

The Levin report will be examined by policy makers including the SEC and Commodity Futures Trading Commission, which are writing hundreds of Dodd-Frank rules governing derivatives, mortgage securities and proprietary trading.

Coburn, the senior Republican on the subcommittee, said the review carries more heft than the three separate reports issued earlier this year by a politically divided Financial Crisis Inquiry Commission.

Goldman Practices

“We don’t need commissions to do our job and this proves it,” Coburn said. The FCIC “spent $8 million and 15 months” on its inquiry and “didn’t report anything of significance.”

The panel said Goldman Sachs relied on “abusive” sales practices and was rife with conflicts of interest that encouraged putting profits ahead of clients.

“While we disagree with many of the conclusions of the report, we take seriously the issues explored by the subcommittee,” van Praag said.

Van Praag pointed to the firm’s recent examination of its business practices that prompted it to make “significant changes that will strengthen relationships with clients, improve transparency and disclosure and enhance standards for the review, approval and suitability of complex instruments.”

In the case of one CDO, Hudson Mezzanine Funding 2006-1, Goldman Sachs told investors its interests were “aligned” with theirs while the firm held 100 percent of the short side, according to the report.

Gemstone CDO

The report detailed a $1.1 billion Deutsche Bank CDO known as Gemstone VII, which was backed with subprime loans that its then-top trader, Greg Lippmann, referred to as “crap.” The head of the bank’s CDO group, Michael Lamont, said in an e-mail cited in the report that he would try to sell the CDO “before the market falls off a cliff.”

On lending, the panel alleges that executives at failed thrift Washington Mutual Inc. dumped its bad loans on clients while misleading them about their value.

“WaMu selected delinquency-prone loans for sale in order to move risk from the banks’ books to the investors in WaMu securities,” Levin said.

Compounding that problem, the subcommittee found, was an apparently cozy relationship between WaMu and its regulator, the Office of Thrift Supervision.

WaMu E-Mail

The report cited a July 2008 e-mail from then-OTS director John Reich to WaMu CEO Kerry Killinger, in which Reich said the regulator would issue a memorandum of understanding regarding the bank’s problems.

“If someone were looking over our shoulders, they would probably be surprised we don’t already have one in place,” Reich wrote, apologizing twice for communicating the decision in an e-mail.

Under the Dodd-Frank regulatory overhaul, the OTS will be folded into other regulators in July.

“The head of OTS knew his agency had been providing preferential treatment to the bank,” Levin said. “The OTS was abolished by Dodd-Frank, and for good reasons.”

At yesterday’s press briefing Levin called credit rating firms Moody’s Investors Service and Standard & Poor’s “a key cause to the crisis.”

Triple-A Ratings

The raters, which the report says stamped the highest Triple-A grades on securities they knew were souring, were hamstrung by a system that has a built-in conflict of interest, Levin said. The Wall Street banks pay the firms for their ratings, leading to competitive pressure between the firms that may have pushed them to more readily place a high rating on a product.

The panel released nine “findings of fact” on the failures of the credit raters, including inadequate resources, inaccurate rating models and a failure to reevaluate old ratings when they recognized they might be inaccurate.

The raters also “shocked the financial markets” with mass downgrades of thousands of residential mortgage-backed securities and CDO ratings, according to the report.

“Perhaps more than any other single event, the sudden mass downgrades of RMBS and CDO ratings were the immediate trigger for the financial crisis,” the report said.

--With assistance from Christine Harper in New York. Editors: Lawrence Roberts, Dan Kraut

To contact the reporters on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net; Clea Benson in Washington at cbenson20@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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