According to the 2rd qtr. OCC Derivative Report, the 5 largest holders of derivatives (commercial banks) hold 97% of all derivatives.
By Daniel at 8 November, 2009, 1:12 pm
Those commercial banks are JP Morgan (JPM), Goldman Sachs (GS), Bank of America (BAC), Citi (C) and Wells Fargo (WFC). The table below shows the total amounts of assets (in $billions), total amount of derivatives (in $billions), the percentage increase/decrease in assets from the previous quarter, the percentage increase/decrease in derivatives from the previous quarter, and the ratio of assets to derivatives holdings (A/D Ratio). The banks are shown in ascending order based on their A/D Ratio.
Inc/Dec. Inc/Dec.
Assets Derivatives Assets Derivatives A/D Ratio
GS $119.678 $40,477.262 -25.9% 1.4% 0.3%
JPM $1,663.998 $71,941.219 -1.4% -1.5% 2.3%
C $1,165.400 $31,943.721 1.9% 7.8% 3.6%
BAC $1,450.830 $39,064.884 1.2% 2.6% 3.7%
WFC $1,100.177 $5,111.215 110.0% 173.0% 21.5%
I assume WFC purchased another company in the 2nd quarter to have a jump in assets like that. Note the increase/decrease in assets and derivatives, as well as the ratio of assets to derivatives. Generally, if assets increase, so do derivatives - if assets decline, so do derivative - with one exception. Goldman’s ASSETS DECLINED by almost 26% but DERIVATIVES INCREASED by 1.4%. Note also the extremely low ratio of assets to derivatives.
Now, the interesting part - all of the “commercial banks” above are part of a larger holding company. When you strip out the assets of the commercial banking operations, the remaining assets of the holding company are uniformly lower than the assets in their respective commercial banking operations….with the exception of one – Goldman Sachs. Below are the figures for Goldman Sachs the holding company, excluding commercial banking operations, showing quarter-over-quarter increases/decreases and the A/D Ratio.
Inc/Dec. Inc/Dec.
Assets Derivatives Assets Derivatives A/D Ratio
CS Holding Co. $764.532 $7,821.613 8.0% -6.5% 10.5%
While the commercial banking operations of Goldman are showing a significant decrease in assets with an increase in derivatives, the holding company did the opposite – a notable increase in assets with a notable decline in derivatives. What is the purpose of their latest shell game?
Rounding out the top ten, the following table shows the remaining five banks in the top 10 for derivatives holdings. The table shows the total amounts of assets (in $billions), total amount of derivatives (in $billions), and the ratio of assets to derivatives holdings (A/D Ratio).
Assets Derivatives A/D Ratio
HSBC Bank $158.959 $3,152.000 5.0%
Bank New York/Mellon $162.003 $1,271.036 12.7%
State Street Bank $150.465 $539.065 27.9%
SunTrust Bank $170.140 $295.908 57.5%
National City Bank $141.714 $178.217 79.5%
Of the remaining 15 banks on the list of the 25 largest holders of derivatives, the bank with the lowest ratio of assets to derivatives is Northern Trust Company with a 40.5% ratio (approximately $62 Billion in assets with $153 Billion in derivatives) while the bank with the highest ratio of assets to derivatives is TD Bank National at 364% ($104 Billion in assets against $28 Billion in derivatives).
In review, the figures for the commercial banking operations of Goldman Sachs are:
1. $119 Billion in Assets (making them #15 in terms of assets on the list of the top 25 holders [commercial banks] of derivatives)
2. $40.477 TRILLION….yes….over $40 TRILLION in derivatives (#2 out of the top 25)
3. Goldman has an Assets/Derivatives Ratio of 0.3% (7.6 times lower than the next lowest, which is JP Morgan at 2.3% and over 1,200 times lower than TD National Bank, which has just a slightly lower asset base [$104 Billion])
It can’t be much longer before the system, or at least Goldman, blows up again.
- Vics
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