-- Goldman Sachs International Bank (GSIB) is the largest European bank
subsidiary of The Goldman Sachs Group Inc. (GS; A-/Negative/A-2).
-- We consider GSIB to be "core" to GS under our group ratings
-- We are assigning our 'A/A-1' counterparty credit ratings to GSIB, in
line with GS' other core operating entities.
-- The negative outlook reflects the outlook on GS.
On Nov. 12, 2012, Standard & Poor's Ratings Services assigned its 'A/A-1'
long- and short-term counterparty credit ratings to Goldman Sachs
International Bank (GSIB). The outlook is negative.
The ratings on GSIB reflect our view of its "core" status to GS. Our
assessment is based on GSIB's position as the group's largest European banking
entity, the high level of operational integration with other U.K. entities and
the group, and our view that offering securities and banking services in
Europe and Asia remain central to GS' long-term strategy.
As a result of assigning "core" status, we align the ratings on GSIB with
those on the other "core" operating companies of GS, which includes the other
rated U.K. entity, Goldman Sachs International (GSI; A/Negative/A-1). As the
group holding company, GS is rated one notch lower than these operating
companies due to its structural subordination.
GSIB serves the international clients of GS in Europe, as well as in Asia,
through GSIB's Korean branch. GSIB's activities include European government
bond trading, loan origination and secondary loan trading, and securities
lending. The European government bond trading business was recently
transferred to GSIB from GSI, a sister company. GSI is the group's primary
broker-dealer entity outside of the U.S. GS has a history of providing capital
support to GSIB, and we believe it is committed to maintaining adequate
capital at the subsidiary for business and regulatory purposes.
GSIB reported pretax profits of $10.6 million in 2011 on revenues of $62.8
million. While profit will to some extent follow fluctuations in market
volume, we expect profit at year-end 2012 to better reflect the transfer of
the government bonds business, which happened only late in 2011.
The outlook is negative, reflecting that on GS. We expect the ratings to move
in line with those on GS. We could also lower the ratings if we no longer
consider GSIB to be "core" to GS. While an unlikely prospect, this could
result from a period of sustained very weak operating performance at the
subsidiary level, or evidence that securities and banking activity in Europe
is no longer part of the group's global strategy.
Related Criteria And Research
All articles listed below are available on RatingsDirect on the Global Credit
Portal, unless otherwise stated.
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Group Rating Methodology And Assumptions, Nov. 9, 2011
-- EARNINGS UPDATE: The Goldman Sachs Group Inc. Ratings Unaffected By
Good Third-Quarter Results, Oct. 16, 2012
New Rating; CreditWatch/Outlook Action
Goldman Sachs International Bank
Counterparty Credit Rating A/Negative/A-1
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left