NEW YORK (Dow Jones)--Goldman Sachs (GS) is pondering ways to pay back the government, but it might take some time, CFO David Viniar said at the Credit Suisse financial services conference Wednesday.
-Goldman Sachs, along with fellow surviving investment bank Morgan Stanley (MS), received $10 billion from the government last year. -"It is never too early to start thinking" about paying the government back, but there are restrictions on how that can be done, he said. The money can only be paid back when the company raises Tier 1 capital, not from Goldman's earnings. However, the government might change the rules regarding repayment, Viniar said. Whether Goldman issues a large common-stock offering or preferred-stock offerings remains to be seen, he said.
-"I am sure the Treasury wants us to pay it back at some point, and we want to as well," Viniar said. Goldman Sachs would like to get out from under the restrictions of the capital structure, which include some minor executive compensation restrictions, he said, adding, "it will send a good signal to pay it back."
-Additionally, Viniar said, while the credit market seems to have hit the bottom in mid-December, Goldman's economists remain very bearish for the next six months.
-Goldman has been effectively managing its risk position throughout the crisis. The company wrote down $53.6 billion or 70% of risky assets last year, including leverage loans, residential and commercial real-estate loans.
-The bank is starting to see opportunities in its basic business of trading with clients, and some distressed portfolios of assets are starting to become available. They aren't large in size, and aren't trading yet, but it is a precursor to a more robust market, Viniar said.
-While the firm marks assets according to fair-value accounting rules, Goldman is most worried about "anything real-estate related," Viniar said. The company has principal investments in the area of real estate, which is a long-term, defensive portfolio, but some assets may be worth less in the future, he said.
-Viniar said Goldman, which became a bank holding company last September, will look at acquisition opportunities to raise bank deposits, and it is "not stubborn." He indicated that acquisitions are difficult, and it is very hard to merge company cultures. "There is a very short history of successful acquisitions," he said.
-Goldman's new status won't change the company's focus. "We will largely remain a wholesale company, and we don't like or know the retail business very well," Viniar said.
-After the Bear Stearns collapse, Fed regulators started visiting Goldman Sachs regularly. "We were used to them coming, and it wasn't so bad," Viniar said.
-Goldman Sachs is trading up 7.9% at $89.41. The stock is up roughly 5% for the year.
-By Jessica Papini, Dow Jones Newswires; 201-938-2437; firstname.lastname@example.org
Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 25 PM EST 02-04-09