June 25 (Reuters) - The U.S. financial regulatory reform bill is set to limit banks' investment in hedge funds and private equity firms, and Goldman Sachs will have the most work to do.
Under the law now before Congress, still subject to final approval, up to 3 percent of a bank's Tier 1 capital can be invested in private equity and hedge funds. For Goldman, the gap between the investments potentially affected and the 3 percent limit is biggest.
But banks are expected to have multiple years to comply with the law, making it not necessarily onerous.
Below is a table of the five largest U.S. dealers' Tier 1 capital and the amount they can set aside for investments in hedge funds and private equity. (Billions of dollars as of Dec. '09))
COMPANY TIER 1 CAPITAL INVESTMENTS 3 PERCENT NOTES
POTENTIALLY OF TIER 1
AFFECTED JPMorgan Chase132.97 5.9 3.99 1 Bank of America 120.39 14.07 3.61 Citigroup 104.50 5 3.14 2 Goldman Sachs 64.64 15.92 1.94 Morgan Stanley 46.67 4.9 1.40
1) JPMorgan figure includes only private equity investments, and does not include hedge funds or real estate
2) According to person familiar with the matter; all other banks disclosed information in their regulatory filings (Compiled by Bangalore and New York newsrooms)
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