Goldman Sachs 2013 Annual Report Download - page 206

Notes to Consolidated Financial Statements
Note 26.
Credit Concentrations
Credit concentrations may arise from market making, client
facilitation, investing, underwriting, lending and
collateralized transactions and may be impacted by changes
in economic, industry or political factors. The firm seeks to
mitigate credit risk by actively monitoring exposures and
obtaining collateral from counterparties as deemed
appropriate.
While the firm’s activities expose it to many different
industries and counterparties, the firm routinely executes a
high volume of transactions with asset managers,
investment funds, commercial banks, brokers and dealers,
clearing houses and exchanges, which results in significant
credit concentrations.
In the ordinary course of business, the firm may also be
subject to a concentration of credit risk to a particular
counterparty, borrower or issuer, including sovereign
issuers, or to a particular clearing house or exchange.
The table below presents the credit concentrations in cash
instruments held by the firm.
As of December
$ in millions 2013 2012
U.S. government and federal
agency obligations 1$90,118 $114,418
% of total assets 9.9% 12.2%
Non-U.S. government and
agency obligations 1$40,944 $ 62,252
% of total assets 4.5% 6.6%
1. Substantially all included in “Financial instruments owned, at fair value” and
“Cash and securities segregated for regulatory and other purposes.”
As of December 2013 and December 2012, the firm did not
have credit exposure to any other counterparty that
exceeded 2% of total assets.
To reduce credit exposures, the firm may enter into
agreements with counterparties that permit the firm to
offset receivables and payables with such counterparties
and/or enable the firm to obtain collateral on an upfront or
contingent basis. Collateral obtained by the firm related to
derivative assets is principally cash and is held by the firm
or a third-party custodian. Collateral obtained by the firm
related to resale agreements and securities borrowed
transactions is primarily U.S. government and federal
agency obligations and non-U.S. government and agency
obligations. See Note 9 for further information about
collateralized agreements and financings.
The table below presents U.S. government and federal
agency obligations, and non-U.S. government and agency
obligations, that collateralize resale agreements and
securities borrowed transactions (including those in “Cash
and securities segregated for regulatory and other
purposes”). Because the firm’s primary credit exposure on
such transactions is to the counterparty to the transaction,
the firm would be exposed to the collateral issuer only in
the event of counterparty default.
As of December
in millions 2013 2012
U.S. government and federal
agency obligations $100,672 $73,477
Non-U.S. government and
agency obligations 179,021 64,724
1. Principally consists of securities issued by the governments of Germany,
France and the United Kingdom.
204 Goldman Sachs 2013 Annual Report