Goldman Sachs 2012 Annual Report Download - page 99
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Management’s Discussion and Analysis
Lending Activities. We manage the firm’s traditional
credit origination activities, including funded loans and
lending commitments (both fair value and held for
investment loans and lending commitments), using the
credit risk process, measures and limits described above.
Other lending positions, including secondary trading
positions, are risk-managed as a component of market risk.
Other Credit Exposures. The firm is exposed to credit risk
from its receivables from brokers, dealers and clearing
organizations and customers and counterparties.
Receivables from brokers, dealers and clearing
organizations are primarily comprised of initial margin
placed with clearing organizations and receivables related
to sales of securities which have traded, but not yet settled.
These receivables have minimal credit risk due to the low
probability of clearing organization default and the short-
term nature of receivables related to securities settlements.
Receivables from customers and counterparties are
generally comprised of collateralized receivables related to
customer securities transactions and have minimal credit
risk due to both the value of the collateral received and the
short-term nature of these receivables.
Credit Exposures
As of December 2012, our credit exposures increased as
compared with December 2011, reflecting an increase in
cash and loans and lending commitments, partially offset
by a decrease in OTC derivative exposures. The percentage
of our credit exposure arising from non-investment-grade
counterparties (based on our internally determined public
rating agency equivalents) increased from December 2011
reflecting an increase in loans and lending commitments.
Counterparty defaults rose slightly during the year ended
December 2012; however, the estimated losses associated
with these counterparty defaults were lower as compared
with the prior year.
The tables below present the firm’s credit exposures related
to cash, OTC derivatives, and loans and lending
commitments associated with traditional credit origination
activities broken down by industry, region and internal
credit rating.
Goldman Sachs 2012 Annual Report 97