Under fire, Goldman offers way round warehouse lines

Goldman Sachs responded to mounting political pressure and regulatory scrutiny of its Metro International metals business, by offering customers immediate access to aluminium stored in its warehouses.

In a statement outlining the bank’s proposals to cut waiting times at all London Metal Exchange (LME) warehouses, Goldman said it would let major consumers swap aluminium held in its warehouses for metal the bank has acquired, without the need to pay a steep cash premium.

Customers and US lawmakers have accused Goldman Sachs and other warehouse owners of artificially inflating wait times and lines to boost rents for warehouse owners and cause metal prices to rise. One major customer estimated the delays have cost consumers more than US$3 billion.

“We feel horrible for consumers if they can’t get metal. We don’t believe that to be the fact,” Chief Operating Officer Gary Cohn, said on CNBC. Cohn, who started his career in Goldman’s commodity business, said the bank had secured metal from producers over the past week, but had yet to find a single customer ready to take it up on the offer to swap metal.

Still, it marks the bank’s first effort to address years of complaints over the long waits, an issue that finally erupted last week as US senators questioned why banks should be involved in owning warehousing and chartering oil tankers.

The bank’s move came as a surprise to traders and end-users, many of whom had been bracing for a drawn-out investigation.