Goldman Sachs Group Inc. is planning to shift its principal strategies business into a fund that raises outside money, Bloomberg reported on Thursday, citing a source with direct knowledge of the plan.
The unit makes bets with the company's own capital, and Goldman may announce as soon as Friday plans to separate the business from the bank's equities unit, Bloomberg reported.
The move would be one of the first major spinoffs by a large U.S. bank in the wake of Congress passing its financial regulation overhaul, known as the Dodd-Frank Act, in July.
Led by Hong Kong-based Morgan Sze, 44, the team has not set a target for how much outside money it wants to raise, though it aims to complete the process by year-end.
But Bloomberg reported the unit is attempting to beat other proprietary trading desks to raising outside capital, in a wave of expected spinoffs by Wall Street banks.
Under the new Dodd-Frank Act, banks are prohibited from engaging in proprietary trading — or trading in the market for the bank's own profits — and holding more than 3 percent of their Tier 1 capital in private equity or hedge fund investments.
Industry rivals Citigroup Inc., Morgan Stanley and Bank of America Corp. have all begun shedding smaller private equity investments due to the new rules.
Goldman had $15.5 billion invested in private equity or hedge funds, as of March 31, and another $12.1 billion in funding commitments, according to a securities filing.
The new rules would cap such investments at $2.1 billion, or 3 percent of the bank's $68.5 billion in Tier 1 capital.
Goldman shares dipped 1 percent to $154.98 in morning trading on the New York Stock Exchange.
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