Goldman Sachs is a New York-based investment banking firm that engages in global investment banking, securities, investment management, and other financial services, primarily with institutional clients. Founded in 1869, the firm is recognised as one of the most prestigious institutions in the world, although its reputation has suffered after the financial sector drew fire since the global financial crisis.
Goldman Sachs CEO fears risks to system if rival banks plead guilty
The head of US bank Goldman Sachs has warned that guilty pleas from rivals BNP Paribas and Credit Suisse, under legal proceedings in the United States, could hurt the financial system.
The two European banks, under probes for violating US sanctions and abetting tax evasion, are potentially facing very heavy fines that could reach billions of US dollars.
US authorities are urging the banks to plead guilty and have threatened criminal prosecution, which could lead to the revocation of their licences - potentially forcing other banks to determine whether to continue doing business with them.
Goldman Sachs chief executive Lloyd Blankfein, asked about the issue on the sidelines of the bank's annual shareholder meeting in Texas, said it would be difficult to stop doing business with the two European banks.
Given the many ties between the world's banks, the resolution of the case could affect internal credit relationships within the financial system, Blankfein said, according to comments reported by The Wall Street Journal.
"It becomes a very weighty decision to cut someone off, and we wouldn't do it lightly."
He said the impact "depends on what the consequences of the guilty pleas are."
According to the Financial Times, Blankfein also warned that "for us to not deal with someone would be a further risk to the system."
Accepting a guilty plea - which no bank has done in the United States in two decades - could have serious consequences for the operations of the two banks, exposing them to damages claims.
In similar cases, US banks have been fined heavily but not forced to plea guilty.
BNP Paribas is accused of having violated US sanctions against Cuba, Iran and Sudan between 2002 and 2009. The bank's chief executive Jean-Laurent Bonnafe came to the US to make his bank's case last week.
Credit Suisse is facing prosecution for its part in helping rich Americans hide their assets to avoid US taxes.