Goldman launches ICBC selldown of about $1 billion - source

HONG KONG Mon Jan 28, 2013 7:59am EST

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid

A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012.

Credit: Reuters/Brendan McDermid

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HONG KONG (Reuters) - Goldman Sachs (GS.N) launched a sale of about $1 billion worth of Hong Kong-traded shares in Industrial and Commercial Bank of China (1398.HK) on Monday, according to a source with knowledge of the deal.

Goldman, looking to reduce further its stake in the world's largest bank, offered the shares in ICBC at HK$5.77 each, equivalent to a discount of 3 percent to Monday's close of HK$5.95, added the source, who was not authorized to speak publicly on the matter.

The U.S. bank has held a stake in ICBC since 2006.

The sale would be Goldman's second in less than a year, after the New York-based investment bank raised $2.5 billion from a partial selldown of ICBC in April of 2012, most of which was bought by Singapore state investor Temasek TEM.UL.

The sale last year was part of an effort by Goldman to derisk, Chief Financial Officer David Viniar said at the time. The deal left Goldman with a stake valued at about $2 billion in April last year.

Shares of ICBC have gained about 18 percent since the previous Goldman sale, in line with the performance of the Hang Seng Financial Index .HSHFI.

(Reporting by Michael Flaherty and Elzio Barreto; Editing by Robert Birsel and Hans-Juergen Peters)

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Comments (1)
MikeBarnett wrote:
This proves that US banks are in deep trouble. Goldman is gathering cash, and it is selling profitable investments to raise that cash. The $2.5 billion of ICBC that Goldman sold in April of 2012 rose 18% in the nine months after the sale. Goldman could have earned another $450 million by holding the stock. In addition, Goldman offered the current stock sale at a 3% discount, automatically losing $30 million, at a time when China is financing construction of infrastructure for its central and western provinces as part of its 12th Five Year Plan. The Chinese government is offering guaranteed profits for its bank. What is wrong with the people at Goldman?

On the other hand, I have heard disturbing reports of banks having too many toxic assets after the financial crisis that began in 2008. I was told of oversold securities creating too much insurance and not enough assets to be insured. This would create huge amounts of worthless paper. Further, some economists have speculated that the US GDP may be one-half to three-fourths of its reported value, owing to these bogus securities, and that has explained the reluctance of US banks to lend when lending was needed to revive the US economy. The banks did not have the “real” money and did not want to reveal their shortages of funds. This could explain Goldman’s willingness to take heavy losses.

Jan 28, 2013 6:25pm EST  --  Report as abuse
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