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Dec 14, 2008

Goldman Sachs 'to report $2bn loss'

GOLDMAN Sachs looks set to finally succumb to the fate that has beset most of its rivals, with the Wall Street bank this week poised to report its first loss in generations.
The bank, which became a public company in 1999, is set to report its first loss since the Wall Street crash of 1929, with the present loss caused by huge write-offs on the value of its investments and a fall in revenues as investment banking, sales and trading fall as part of the down turn. Analysts expect Goldman to report that it lost around $2 billion (£1.4bn) in the three months to the end of October, compared with a $3.18bn profit during the same period last year.

Morgan Stanley is also expected to post a fourth-quarter loss this week, only the second since the company floated in 1986.

While analyst consensus is for the bank to book a loss of $300 million in the last three months of its financial year, forecasts range from a small profit to a loss of almost $1bn.

Central to its problems are its loans on commercial property, which ratings agency Standard & Poor's estimates to be worth $7.7bn at book value, none of which has been written down.

The banks have also encountered unprecedented volatility, with the period being reported covering the failure of Lehman Brothers.

Source : Business

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