Goldman Sachs 2013 Annual Report Download - page 104

Management’s Discussion and Analysis
Selected Country Exposures
There have been continuing concerns about European
sovereign debt risk and its impact on the European banking
system and a number of European member states have
experienced significant credit deterioration. The most
pronounced market concerns relate to Greece, Ireland,
Italy, Portugal and Spain. The tables below present our
credit exposure (both gross and net of hedges) to all
sovereigns, financial institutions and corporate
counterparties or borrowers in these countries. Credit
exposure represents the potential for loss due to the default
or deterioration in credit quality of a counterparty or
borrower. In addition, the tables include the market
exposure of our long and short inventory for which the
issuer or underlier is located in these countries.
Market exposure represents the potential for loss in value
of our inventory due to changes in market prices. There is
no overlap between the credit and market exposures in the
tables below.
The country of risk is determined by the location of the
counterparty, issuer or underlier’s assets, where they
generate revenue, the country in which they are
headquartered, and/or the government whose policies affect
their ability to repay their obligations.
As of December 2013
Credit Exposure Market Exposure
in millions Loans
OTC
Derivatives Other
Gross
Funded Hedges
Total Net
Funded
Credit
Exposure
Unfunded
Credit
Exposure
Total
Credit
Exposure Debt
Equities
and
Other
Credit
Derivatives
Total
Market
Exposure
Greece
Sovereign $ — $ 233 $ — $ 233 $ (72) $ 161 $ — $ 161 $ 12 $ — $ (2) $ 10
Non-Sovereign — 6 — 6 — 6 — 6 10 3 3 16
Total Greece — 239 — 239 (72) 167 — 167 22 3 1 26
Ireland
Sovereign — 7 125 132 — 132 — 132 (48) — (162) (210)
Non-Sovereign 373 356 127 856 (5) 851 41 892 291 91 108 490
Total Ireland 373 363 252 988 (5) 983 41 1,024 243 91 (54) 280
Italy
Sovereign — 1,704 2 1,706 (1,691) 15 — 15 371 — 62 433
Non-Sovereign 10 527 195 732 (31) 701 660 1,361 361 (13) (794) (446)
Total Italy 10 2,231 197 2,438 (1,722) 716 660 1,376 732 (13) (732) (13)
Portugal
Sovereign — — 103 103 — 103 — 103 (27) — (73) (100)
Non-Sovereign — 16 20 36 — 36 — 36 126 — (112) 14
Total Portugal — 16 123 139 — 139 — 139 99 — (185) (86)
Spain
Sovereign — 52 — 52 — 52 — 52 930 — 223 1,153
Non-Sovereign 1,025 230 65 1,320 (93) 1,227 855 2,082 1,490 158 (1,144) 504
Total Spain 1,025 282 65 1,372 (93) 1,279 855 2,134 2,420 158 (921) 1,657
Total $1,408 1$3,131 2$637 $5,176 $(1,892) 3$3,284 $1,556 $4,840 $3,516 $239 $(1,891) 3$1,864
1. Principally consists of loans collateralized by cash, securities and real estate.
2. Includes the benefit of $4.4 billion of cash and U.S. Treasury securities collateral and excludes non-U.S. government and agency obligations and corporate securities
collateral of $254 million.
3. Includes written and purchased credit derivative notionals reduced by the fair values of such credit derivatives.
102 Goldman Sachs 2013 Annual Report