Goldman Sachs to sell ICBC stake


A big principal gain for Goldman Sachs might be in the offing, allowing it to book a big one-time, earnings-goosing gain. This tactic has been a specialty of the bank over the years. The principal gains slowed a bit in the aftermath of the financial crisis, but we may be seeing a return.

Bloomberg reports Goldman Sachs is seeking to sell a $1 billion stake in Industrial & Commercial Bank of China Ltd. "after the world's biggest lender by market value rebounded almost 50 percent from last year's low…The Wall Street firm is selling down an investment first made in January 2006 when Goldman Sachs and client funds it manages agreed to invest $2.58 billion in Beijing-based ICBC. The bank and the funds have offloaded ICBC shares at least four times prior to today's effort."

It's unclear how much of a gain this will generate, but it does appear the time to sell is ripe.

Goldman Sachs is not the only bank that has benefited from large principal investments in China.

"Global financial firms including Temasek, Bank of America Corp. and Citigroup Inc. invested a combined $33 billion in Chinese banks from 2001 to 2009, according to data compiled by the China Banking Regulatory Commission. Their profits from reducing those stakes overshadow the $10 billion that global banks have jointly earned over the past decade from their own franchises in China," says Bloomberg.

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