Goldman expects ‘recalibration’ on Volcker rule

The bank already has a five-year extension to comply with the regulation which would push it to divest private fund stakes worth $6bn.

Goldman Sachs is expecting a ‘recalibration’ on the Volcker rule, according to its chief financial officer Martin Chavez.

Commenting on the regulation in the investment bank’s second quarter earnings call, Chavez said he thought there was an appetite for change among US regulators.

“Regulators are taking opportunities to step back and potentially recalibrate. When this recalibration occurs, we’d expect the regulations to continue to be thoughtful, to protect the system and at the same time, to support growth and a well-functioning market,” said Chavez. “I wouldn’t make a specific comment on how Volcker might evolve; multiple regulators have talked about this publicly.”

The investment bank had until 21 July 2017 to offload its private fund stakes in accordance with the rule, unless the Federal Reserve approved its request for an extension. It revealed in May that it had secured a five-year extension covering all of its covered funds, which totalled around $6 billion at the end of the first quarter.

The Volcker Rule is part of the 2010 Dodd-Frank Act and forces banks to limit their investments in private funds to no more than three percent of Tier 1 capital.

A bill that includes a proposal to eliminate the Volcker Rule, the Financial Choice Act, is currently working its way through the US legislature, as reported by Secondaries Investor’s sister publication pfm.

The bank’s latest secondaries fund, Vintage VII, has been aiming to raise $5 billion since May 2016. It held first close on the fund in July 2016 on around $3 billion, Secondaries Investor exclusively revealed at the time.