Tag: Goldman Sachs

Top global banks crash crypto party, invest heavily in blockchain, currency firms, BFSI News, ET BFSI

Banking & Finance

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Despite being very vocal about how bad Bitcoin supposedly is, top global can’t ignore the potential revenue streams and importance of having a strong strategic position in the crypto economy.

Most major banks including Standard Chartered, Barclays, Citigroup, Goldman Sachs are investing in crypto and blockchain-related companies in 2021.

Out of the top 100 banks by assets under management, 55 have invested in cryptocurrency and/or blockchain-related companies. Either directly, or through subsidiaries, according to Block Data.

The most active investors based on the number of investments in blockchain companies are Barclays (19), Citigroup (9), Goldman Sachs (8), J.P. Morgan Chase (7) and BNP Paribas (6).

The investors active in the biggest funding rounds are Standard Chartered ($380 million in 6 rounds), BNY Mellon ($320.69 million in 5 rounds), Citigroup ($279.49 million in 9 rounds), UBS Group ($266.2 million in five rounds) and BNP Paribas ($236.05 million in 9 rounds).

Where are they investing?

About 23 of the top 100 banks by assets under management are building custody solutions, or investing in the companies that provide them.

Custodians offer financial services to look after their clients’ funds, for a fee. They either build their own technology to offer this service, or use a technology provider whose solutions they can integrate into their own systems.

Why are banks investing in cryptos

Seeing cryptocurrency exchanges with a fraction of their staff become substantially more profitable or valuable than many banks. This started as early as 2018, when Binance, the leading exchange at the time, recorded $54 million more profit than Deutsche Bank, with just 200 vs 100,000 employees. More recently, Coinbase’s valuation was higher than Goldman Sachs, with just 4% of their employees.

Countless requests from their clients to provide Bitcoin solutions along with a change in regulations in 2020 that allows banks to offer crypto custody solutions is also among the reasons for banks to turn to cryptos.

The investments

Standard Chartered has invested $380 million via 6 rounds in firms including blockchain network Ripple, whose XRP token has a capitalisation of around $48 billion. It’s also an investor in Cobalt, a trading technology provider based in the UK. BNY has put money in Fireblocks, whose platform allows financial institutions to issue, move and store cryptocurrencies.

Citibank has invested $279 million in 9 rounds. It has put money in SETL, whose ledger technology is used to move cash and other assets.

UBS, with $266 million and 2 rounds, is an investor in Axoni, whose technology is used to modernize infrastructure in capital markets.

BNP Paribas has invested $236 million in 9 rounds and was developing real-time trade and settlement applications using smart contracts based on the DAML programming language with Digital Asset.

Morgan Stanley with $234 million with 3 investments has invested in NYDIG, a crypto custody firm and the bitcoin subsidiary of Stone Ridge, a $10 billion alternative asset manager.

JP Morgan Chase has bet $206 million via seven rounds and has investments in ConsenSys, an ethereum software company.

Goldman Sachs has put $204 million through eight investments, and its investee firms include Coin Metrics, a provider of blockchain data to institutional clients.

MUFG has put $185 million in six investment rounds in firms including Coinbase, the US cryptocurrency exchange that went public in April, and in Bitflyer, a Tokyo-based cryptocurrency exchange.

ING has bet $170 million spread across 6 investments and has backed HQLAx, a blockchain liquidity management platform.



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Govt may have to take the biggest hit if Vodafone Idea fails, BFSI News, ET BFSI

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NEW DELHI: With outstanding dues of nearly Rs 1.6 lakh crore in spectrum payments and AGR dues, the government may be the biggest loser in case Vodafone Idea collapses under crippling losses and heavy debt.

The hit for the government just doesn’t stop here. If one adds the outstanding Rs 23,000 crore owed to the banks, the impact could be one of the biggest in corporate history as a large part of the loans (65-70%) is extended by state-run lenders. The banks have further extended guarantees worth thousands of crores to the company, which also run the risk of defaults.

“The telecom department and the national exchequer would lose the most in case of a collapse of Vodafone Idea. The picture looks grim considering the poor recoveries and unrealised outstanding after the collapse of Anil Ambani’s Reliance Communications and Aircel, where too several thousands of crores of rupees remain locked. Taxpayers stand to lose the most,” an analyst with a leading brokerage told TOI.

Cumulatively, the company currently has a debt of Rs 1.8 lakh crore, and has been bleeding financially with losses pegged at Rs 7,000 crore during the March quarter. The debt tops Rs 1.8 lakh crore, according to ICICI Securities. “We see payment of liabilities coming soon, while fund availability remains a challenge,” it said.

According to numbers sourced from various analysts and Vodafone Idea’s financial results, at Rs 107, the company remains precariously placed with the lowest average revenue per user (Arpu) among its peers. Reliance Jio reported Arpu of Rs 138 and Bharti Airtel at Rs 145, though the latter has said time and again that at least Rs 200 Arpu is needed to nurse the capital-intensive sector back to health.

Vodafone Idea’s poor outlook was evident after the SoS calls given by its promoters, who have refused to make any further investments into the company, and are asking the government to support its survival. Goldman Sachs said that it expects capex for Vodafone Idea to remain under pressure, “resulting in continued market share loss”. It said that between December this year and April of 2022, the company has about Rs 22,500 crore of dues (debt, AGR and spectrum) payable.



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Goldman Sachs to raise pay for junior investment bankers: report

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Goldman Sachs Group Inc is raising salaries for its junior employees in the investment bank division, Business Insider reported on Sunday.

The bank’s second-year analysts will now make $125,000 in base compensation, while first-year associates will earn $150,000, Business Insider reported citing two people familiar with the situation.

No formal announcement about the pay raise has been made and it was unclear which other levels of employees at the investment banking division have also been given salary increases, the report from the financial and business news website said. Goldman Sachs declined to comment.

Goldman Sachs sets up centre in Hyderabad

Investment banks have raised pay for first- and second-year associates this summer in an attempt to ease the strain on these workers and compensate them more for their work supporting more senior staff in a year of unprecedented deal making.

Citi Group, Morgan Stanley, UBS Group AG and Deutsche Bank AG have already increased pay for their first-year analysts to around $100,000, a raise of about $15,000.

‘Saturday rule’

In February, a group of junior bankers in Goldman’s investment bank told senior management they were working nearly 100 hours a week and sleeping five hours a night to keep up with an over-the-top workload and “unrealistic deadlines.” Half of the group, which consisted of 13 first-year employees, said they were likely to quit by summer unless conditions improved.

Goldman Sachs to set up 250 beds across 4 hospitals in Bengaluru

Goldman’s Chief Executive Officer David Solomon has said the bank was working to hire more associates to help with the workload, and vowed to enforce the “Saturday rule,” which prohibits employees from working between 9 pm Friday night and 9 am on Sunday, except in certain circumstances.

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Coindesk, BFSI News, ET BFSI

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Goldman Sachs Group Inc’s prime brokerage division is clearing and settling cryptocurrency exchange-traded products (ETPs) for some of its European hedge fund clients, Coindesk reported on Friday, citing people familiar with the matter.

The services are currently being offered to a limited number of clients and the bank is considering rolling them out for a broader customer base, the report said.

Goldman Sachs declined to comment on the matter.

The U.S. lender in March restarted its cryptocurrency desk amid growing interest by institutions in bitcoin, and said it was looking at ways to cater to a surge in demand to own and invest in the most popular cryptocurrency.

Goldman Sachs is one of several mainstream financial firms that has dived into the crypto space, despite wild price swings and widening regulatory crackdown on the digital assets.

Rival banks Morgan Stanley and JPMorgan Chase & Co have also started giving clients access to crypto funds, according to media reports.



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Former top US consumer regulator joins crypto risk monitoring firm, BFSI News, ET BFSI

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WASHINGTON: Cryptocurrency startup Solidus Labs has hired the former director of the US Consumer Financial Protection Bureau (CFPB) as its top regulatory official, she told Reuters.

Kathy Kraninger is the latest former Trump administration official to land in the booming digital currency industry as it beefs up on legal expertise and Washington connections amid increasing regulatory scrutiny.

Founded in 2017 by former Goldman Sachs employees, New York-based Solidus Labs provides cryptocurrency trading surveillance and risk monitoring tools. Its backers include private equity firms Evolution Equity Partners and Hanaco Ventures.

Kraninger will lead and build out Solidus Labs’ regulatory team, spending most of her time working with regulators, US lawmakers and traditional institutions to explain how digital markets can be effectively policed, she said in an interview.

Her career in government, including helping to set up the Department of Homeland Security and leading the CFPB from 2018 to 2021, positions her to contribute to a growing debate in Washington over how to regulate cryptocurrencies, she said.

“Bringing the expertise that I have from how federal regulators think, state regulators think … it just seemed to be a fantastic fit,” said Kraninger.

Solidus Labs has built software to monitor crypto markets and help investment firms and other clients screen for manipulation, bad actors and meet compliance obligations. Its clients include crypto exchange Bittrex and Rialto Markets.

The ability to monitor cryptocurrencies has become a major worry for regulators as the ballooning market, which reached a record $2 trillion capitalization in April, has experienced wild volatility.

In June, the Securities and Exchange Commission (SEC) again delayed approving a bitcoin exchange traded fund and sought feedback on the risks of market manipulation.

This month, Senator Elizabeth Warren called for increased cryptocurrency oversight, while Treasury Secretary Janet Yellen told regulators they must quickly establish rules for digital coins linked to fiat currencies, known as stablecoins.

Regulators worry the cryptocurrency market is unstable, opaque and systemically risky.

“We’ve had overwhelming interest from regulatory entities globally,” said Solidus Labs Chief Executive Asaf Meir. “We needed someone who brings in the right experience.”

Crypto and fintech companies have been snapping up former Trump regulators. Former bank regulator Brian Brooks was appointed Binance’s US CEO in May, while Chris Giancarlo, former chair of the US derivatives regulator, is an investor in Solidus and founded the Digital Dollar Project which advocates for US policymakers to develop a digital dollar.



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Goldman Sachs sets up centre in Hyderabad

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Banking and financial services major Goldman Sachs has opened a new facility in Hyderabad as part of its commitment to expand its global centre for engineering and business innovation in India.

The new office is expected to have about 800 people by year-end and grow to over 2,500 people by 2023. The new office will host functions across engineering, finance, human capital management, and support for consumer banking, and specialise in digital banking, artificial intelligence and machine learning areas.

After inaugurating the facility, KT Rama Rao, Telangana IT and Industries Minister, said “Hyderabad is emerging as a key investment destination for the banking and financial services industry in India, on account of Telangana State’s success in establishing a vibrant ecosystem of global capability centres that attracts the very best talent.”

“Goldman Sachs is among the few global investment banks that have opened a new office in Hyderabad amid a global pandemic. We have asked the Goldman Sachs team to work with WE Hub in their effort to empower women,” Rao said.

David M. Solomon, Chairman and CEO, Goldman Sachs, in a statement said: “Our new office in Hyderabad will serve as a crucial innovation hub for a wide range of our businesses and enhance our reputation as a global firm.”

Goldman Sachs to set up 250 beds across 4 hospitals in Bengaluru

To complement each other

The Bengaluru and Hyderabad offices are expected to complement each other in both the execution and support offered to global businesses, and collectively form the Goldman Sachs Services Private Limited entity in India.

Gunjan Samtani, who heads the entity, said: “Our Hyderabad office will be a centre of excellence for consumer banking services, business analytics and platform engineering, including application of emerging technologies such as Artificial Intelligence and Machine Learning to augment our businesses.”

Telangana, Gujarat sign MoU to support women entrepreneurs

The Hyderabad operations commenced remotely in March 2021 and have about 250 employees. By the end of 2021, the Hyderabad office is expected to grow to 800 employees of which about 70 per cent employees will be new hires. By 2023, Hyderabad office could reach 2,500 employees, company officials said. The office has 1,59,000 sq ft space and has capacity to host 1,300 seats.

Founded in 1869, the New York-headquartered Goldman Sachs has been serving Indian clients since the early 1990s. Goldman Sachs is also an active investor in India, deploying more than $3.6 billion in capital since 2006.

Goldman Sachs’ Bengaluru unit has about 7,000 professionals, making it the firm’s second largest office in the world.

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Global banks include Zoom in their apps for business communications, BFSI News, ET BFSI

Banking & Finance

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BFSI companies, which have been operating out of employee homes during the pandemic, are tying up with Zoom as they aggressively adopt virtual communication models.

“A few big global banks have already entered into this collaborative model with Zoom. HSBC UK has expanded its use of video appointments using Zoom. The customers can get mortgage advice, upload any supportive evidence onto the system, and take out a mortgage via this collaborative technology,” Harry Moseley, CIO, Zoom, told ETBFSI.

In a deal between Goldman Sachs Japan and SoftBank group, the Goldman Sachs group set up a framework to coordinate with a 60 member sales team via Zoom.Stressing on the importance of Zoom in banking communications, Moseley said, “If I am selling banking products to you, if I am talking to you about portfolio or investment strategies, etc., the natural tendency of people is to express their positive or negative sentiment. These nonverbal cues are super important.”

Collaborative models

BFSI companies are investing in partnerships and collaborative models involving new tech to stay relevant in a rapidly evolving space. Embedding the Zoom elements in banking, financial services, and insurance apps can help in enhanced customer interaction, Moseley said.

“Financial services in general look forward to reducing the friction to connect with their clients. With virtual communications, they have seen an uptick in volumes and uptick in interactions, and an uptick in a sort of ability to connect with clients,” Moseley said.

Changing work structure

The BFSI sector has been aggressive in adopting digitization. Given the pandemic, they are looking for more collaborations and capabilities in the virtual environment.

“Organisations today need to rethink the whole office structure. Offices need to be collaborative and physically safe. There should be inclusivity, collaboration and safety in the work environment,” Moseley said. “Work is not a place. Work is something we do,” he said.

Zoom has more than 300 million users and can accommodate 50,000 people at a time.



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Global banks in Hong Kong push to get staff back to office, BFSI News, ET BFSI

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By Kane Wu and Scott Murdoch

HONG KONG – Global banks are moving faster in Hong Kong to get staff back to office versus in other major centres, given fewer daily COVID-19 cases in the Asian city, and are offering incentives such as onsite vaccinations and days off to encourage inoculation.

Morgan Stanley has more than 70% of its staff back at their desks in the Asian financial hub, while 60%-70% of Credit Suisse employees are in their office，said people who work there. A Citigroup spokesman said 75% of the bank’s staff were in the workplace in Hong Kong.

JPMorgan plans to reach 75% office occupancy in the coming weeks and Bank of America, which until recently had most of its staff working from home, aims to reach full capacity by end-June, their bankers said.

Morgan Stanley, Credit Suisse, JPMorgan and Bank of America declined to comment.

At UBS, up to 60% of its Hong Kong workforce were back in the office, a spokesman told Reuters.

At these levels, occupancy at the Hong Kong offices of many of these banks will be ahead of the rates in New York and London where daily virus cases are still in the hundreds.

Hong Kong has recorded only one daily case on an average in the past week, while 28.5% of its population has received at least one vaccine shot, government data showed.

The banks’ return-to-office push in Hong Kong comes amid the city’s dealmaking boom and hiring frenzy as the Chinese economy recovers from the pandemic.

Returning to the workplace will allow bankers to attend in-person meetings and help secure more deals in a market where mergers and underwriting deals are set to pick up pace.

Most banks are offering two days off for employees who get vaccinated, in line with a government policy, to encourage staff to get inoculated and hasten their return to office.

Some are pushing harder.

Morgan Stanley set up an on-site vaccination operation on June 16 for staff who had not received any shot, according to people who work there. The bank will do it again in three weeks so people can get their second shot, one of the employees said.

Morgan Stanley declined to comment.

Citi will host its first onsite vaccine clinic for local staff on June 22, the spokesman said.

FLEXIBLE POLICY

While banks are looking to bring workers back to office, some are retaining a flexible approach.

An HSBC spokeswoman said the bank’s Hong Kong headquarters was now open for all staff to return but that people could choose between working from office and home.

“I hated working from home,” said a sales banker at HSBC. “I missed being able to chat with my colleagues all the time for leads and gossips. It was not fun at all at home.”

Standard Chartered said two-thirds of its bankers were back in office but that it too remains flexible. Hong Kong is its single largest market.

The bankers Reuters spoke to declined to be named as they were not authorised to speak to the media.

Goldman Sachs is also encouraging all staff members to get vaccinated in the Hong Kong office, a spokesman said.

“Since we reopened the office to all staff on June 7, the number of employees coming to the office every day is at pre-COVID levels, or higher if you consider that travel is way down,” he said.



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Index publisher MSCI looking at launch of crypto indexes, BFSI News, ET BFSI

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Global securities index publisher MSCI is looking at launching indexes for cryptocurrency assets, according to Chief Executive Henry Fernandez, in what would be another step towards mainstream acceptance for digital currencies and the companies trading in them.

Fernandez, speaking at a Clubhouse event organized by venture capital firm Andreessen Horowitz earlier this week, said MSCI has been talking to experts and is aiming to launch crypto indexes.

He gave no details on what assets any index would focus on nor any timeline for their introduction and MSCI later declined a Reuters request to elaborate on his comments.

Companies including Bank of New York Mellon Corp, Mastercard, Visa and Goldman Sachs have taken small steps towards supporting cryptocurrencies but they are still little used in day-to-day life.

In May, the S&P Dow Jones Indices unveiled new cryptocurrency indexes, bringing bitcoin and ethereum to the trading floors of Wall Street. The new indexes, S&P Bitcoin Index, S&P Ethereum Index and S&P Crypto Mega Cap Index, will measure the performance of digital assets tied to them.

Crypto exchange Coinbase Global, of which Andreessen Horowitz is the biggest shareholder, also successfully listed on the tech-heavy NASDAQ in April, as bitcoin hit a record peak.

MSCI has been looking to expand its offerings, with Fernandez saying on Clubhouse the areas of private credit and environmental, social and governance (ESG) held opportunities for the company.

In April, the company launched 20 thematic indexes to help investors bet on “megatrends” in China that are aligned with the Chinese government’s policy goals.

The company publishes popular indexes for global equities and other securities, used by asset managers and investors to guide the allocation of $14.5 trillion in assets globally as of the end of 2020.

Inclusion in its indexes tends to open the door to more funds investing in the asset in question.



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Goldman expands in crypto trading with plans for Ether options, BFSI News, ET BFSI

Personal Finance

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By Anchalee Worrachate

Goldman Sachs Group Inc. is moving beyond the world of Bitcoin and expanding into Ether.

The bank plans to offer options and futures trading in Ether, the coin that fuels the Ethereum network, in the coming months, according to Mathew McDermott, head of digital assets at Goldman.

It’s the latest step in the Wall Street giant’s crypto ambitions after Goldman restarted a trading desk this year to help clients deal in publicly traded futures tied to Bitcoin. McDermott said the bank also plans to facilitate trades via exchange-traded notes tracking Bitcoin.

Despite all the warnings from regulators about the risks posed by crypto’s extreme volatility and role in money laundering, investment banks are stepping up to offer Bitcoin services to their big clients. Even after prices plummeted in May, falling from about $60,000 to $33,000 in a matter of days, hedge funds are still enthusiastic to trade Bitcoin.

“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” McDermott said in a phone interview on Thursday. “We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

Goldman tapped McDermott, 47, to head its digital currency efforts last year. Under his watch, the business has grown to 17 people from four.

The bank has also invested in crypto start-ups. It put $5 million into a fundraising round by Blockdaemon, a firm that creates and hosts the computer nodes that make up blockchain networks.

In May, Goldman led the $15 million investment into Coin Metrics, a cryptocurrency and blockchain data provider to institutional clients, and McDermott joined the company’s board.

“We are looking at a number of different companies that fit into our strategic direction,” he said.

Other banks have also expanded their crypto operations. Cowen Inc. plans to offer “institutional-grade” custody services for cryptocurrencies. Standard Chartered Plc is setting up a joint venture to buy and sell virtual currencies, though HSBC Holdings Plc is avoiding Bitcoin for now.

McDermott said his conversations with clients show that digital currencies aren’t just a passing fad. In a survey of 850 institutions last week, Goldman found that close to one in 10 are trading crypto, and 20% are interested in it.

“Institutional adoption will continue,” he said. “Despite the material price correction, we continue to see a significant amount of interest in this space.”



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