Goldman Sachs 2012 Annual Report Download - page 201

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 assets
held by the firm. As of December 2012 and
December 2011, the firm did not have credit exposure to
any other counterparty that exceeded 2% of total assets.
As of December
$ in millions 2012 2011
U.S. government and federal agency
obligations 1$114,418 $103,468
% of total assets 12.2% 11.2%
Non-U.S. government and agency
obligations 1, 2 $ 62,252 $ 49,025
% of total assets 6.6% 5.3%
1. Substantially all included in “Financial instruments owned, at fair value” and
“Cash and securities segregated for regulatory and other purposes.”
2. Principally related to Germany, Japan and the United Kingdom as of both
December 2012 and December 2011.
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 2012 2011
U.S. government and federal agency
obligations $73,477 $ 94,603
Non-U.S. government and agency
obligations 164,724 110,178
1. Principally consisting of securities issued by the governments of Germany
and France.
Goldman Sachs 2012 Annual Report 199