Decline in revenue at Goldman Sachs raises concerns
Among Goldman Sachs employees, the chatter started months ago that 2013 was going to be a good bonus year. The Wall Street bank began the year strong, and despite concerns about the economy, its profit doubled over year-ago levels in the second quarter.
These hopes were all but dashed Thursday when the firm announced that revenue in its fixed-income, currency and commodities division, a powerful unit that in better years has produced more than 35 percent of Goldman’s entire revenue, dropped 44 percent from year-ago levels.
The weakness in this division has led to renewed concerns from analysts and investors about the headwinds Goldman and other banks are facing in big money-producing areas like the trading of interest rate products and currencies. There is some concern that the pull back is not short term and could be the new normal.
On Thursday, Goldman faced a number of questions on the revenue decline during a call with analysts. Analysts pushed, without much success, for more details on the reasons behind the drop in revenue for the unit. They also pressed executives about their expectations for the firm’s return on equity, which effectively measures the profit a bank is able to generate on its capital. That return is hovering around 8 percent on an annualized basis, significantly lower than it has been in previous years, and well below the company’s previously stated goal of 20 percent over time.
By slashing what it sets aside for compensation, Goldman was able to post a decent third-quarter profit, despite the revenue weakness. Quarterly earnings came in at $1.52 billion Thursday, largely flat compared with the period a year earlier.
Its profit of $2.88 a share managed to slightly exceed its performance of $2.85 a share in the third quarter of 2012. And earnings were well ahead of expectations of $2.43 a share, according to analysts polled by Thomson Reuters. But revenue in the quarter fell about 20 percent, to $6.72 billion, well below analyst forecasts of $7.36 billion.
Goldman shares fell 2.4 percent Thursday to close at $158.32.
—Susanne Craig and Peter Eavis, The New York Times
Syrian official says peace talks could resume in November
LONDON — A Syrian government official said Thursday that long-postponed peace talks under international auspices — known in diplomatic shorthand as Geneva II — could be held in late November, raising speculation about who would attend and who would represent the fractured Syrian opposition, which is seeking to topple President Bashar Assad.
The official, Qadri Jamil, a deputy prime minister, said in Moscow that the discussions could be held in Geneva on Nov. 23, according to SANA, the official Syrian news agency. Some reports from Moscow quoted him as saying the talks could extend into Nov. 24. His remarks were the first to publicly mention a specific date.
Diplomacy surrounding Syria has gathered pace since September, when Russia and the United States brokered a deal for the Syrian government to give up its chemical weapons. But as the fighting continues, the question of which countries and which Syrian factions would take part in new talks remained unanswered.
At the United Nations, Martin Nesirky, a spokesman for Secretary-General Ban Ki-moon, said he could not confirm the dates mentioned by Jamil, and hinted that talk of a date was premature.
“When it is time for an announcement, the secretary-general will make one,” Nesirky said.
Russia, a key backer of the Syrian government, also indicated that there was no deal on the talks. Reuters quoted Russia’s Foreign Ministry spokesman, Alexander Lukashevich, as telling reporters, “We shouldn’t get ahead of ourselves.”
The SANA agency said Jamil spoke Thursday after talks with Russia’s Middle East envoy, Mikhail Bogdanov, which the agency said were fruitful.
In the first round of discussions in Geneva in June 2012, major world powers failed to reach a consensus on the key question of whether to call for the ouster of Assad. The nine nations at the meeting agreed instead on a plan for a political transition in Syria, with Russia and China blocking attempts by other participants to require Assad’s removal from power.
—Alan Cowell, The New York Times
Europe moves to shield citizens’ data
BRUSSELS — Lawmakers here have introduced a measure in the European Parliament that could require U.S. companies like Google and Yahoo to seek clearance from European officials before complying with U.S. warrants seeking private data.
The measure, an amendment to a broader electronic privacy law pending in Parliament, is a response to Prism, the secret spying program led by the National Security Agency that came to light in June. Europeans were outraged by the revelations that some of the biggest U.S. Internet companies, many of whose users live in Europe, were required by the U.S. authorities to share information in email, Web searches and other online data.
Parliament’s Committee on Civil Liberties, Justice and Home Affairs may vote on the amendment as soon as Monday, said Jan Philipp Albrecht, the German member who is responsible for steering the legislation through the Parliament. His office later clarified that the vote could be delayed until Thursday. Once it wins approval by the committee, Albrecht may begin negotiations on the Parliament’s behalf with European governments, which are discussing their own version of new privacy rules.
The measure would obligate companies not based in the EU to nonetheless comply with European data protection rules if they operate in Europe. Violators could face fines of as much as 5 percent of a company’s global annual revenue.
The amendment would require companies to seek approval from a “supervisory authority” in a bloc country before transferring data on a person’s individual electronic communications, whether phone calls, emails, Web searches or social media interactions, outside the union at the request of a foreign government or court.
—James Kanter, The New York Times