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Goldman Sachs Group Inc. (GS)’s document submitted for this year’s Federal Reserve stress test contained an error that the firm corrected in the final version.
The mistake related to when some of the capital instruments would mature and affected some capital ratio estimates, although not the ratio of Tier 1 common equity to risk-weighted assets, a senior Fed official said. The New York-based firm detected the error and reported it to the Fed, according to a person familiar with the matter who requested anonymity because he wasn’t authorized to comment publicly on the issue.
Goldman Sachs, the fifth-biggest U.S. bank by assets, was one of 18 lenders required to submit plans for share buybacks and dividends to the Fed by the end of January, along with estimates of how much capital it would have in the event of a severe economic downturn. While the central bank approved plans submitted by Goldman Sachs and JPMorgan Chase & Co. (JPM), it ordered that the two banks submit new plans by the end of September to address “weaknesses” detected by the regulator.
The error in Goldman Sachs’s submission didn’t trigger the Fed’s request for a new capital plan, the person said.
The mistake occurred as the firm was changing chief financial officers. David A. Viniar, CFO since before the company went public in 1999, stepped down at the end of January. Harvey M. Schwartz, 49, formerly a co-head of securities sales and trading, took over the role and Viniar, 57, joined the board.
Goldman Sachs, which last year raised its dividend twice (GS) and repurchased $4.64 billion of stock after winning Fed approval, didn’t provide details of its plans in a statement released yesterday. JPMorgan, the biggest U.S. bank by assets, said it will boost its quarterly dividend to 38 cents, more than most analysts expected, and expand stock buybacks.
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