The Goldman Sachs Group, Inc.

Goldman Sachs Group, Inc. is a leading global financial institution offering a comprehensive suite of services to a diverse client base, encompassing corporations, financial institutions, governments, and private individuals worldwide.

The company operates across four primary sectors: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management. In the Investment Banking sector, Goldman Sachs delivers a range of strategic financial advisory services encompassing M&A, divestitures, corporate defence, restructurings, and spin-offs. It also extends a variety of lending services, from middle-market and relationship lending to acquisition financing, supplemented by comprehensive transaction banking services. Additionally, the segment provides robust underwriting services for equity and debt, alongside structured securities origination.

Goldman Sachs' Global Markets division focuses on client execution activities for a plethora of financial instruments. This includes cash and derivatives, credit and interest rate products, along with equity intermediation and financing. This division also offers a range of support services such as clearing, settlement, and custody while dealing in mortgages, currencies, commodities, and equities.

In the Asset Management division, the company demonstrates broad expertise across diverse asset classes, from equities, fixed income, hedge funds, and private equity, to real estate, currencies, and commodities. Alongside these, it delivers tailored investment advisory solutions, and maintains investments in corporate, real estate, and infrastructure entities.

The Consumer & Wealth Management division provides comprehensive wealth advisory and banking services, including financial planning, investment management, deposit and lending services, as well as private banking. Furthermore, it offers unsecured loans and accepts savings and time deposits.

Since its inception in 1869, Goldman Sachs has been committed to creating client value, with its headquarters located in New York, New York.

Operations

Goldman Sachs is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Its purpose is to advance sustainable economic growth and financial opportunity. Its goal, reflected in its One Goldman Sachs initiative, is to deliver the full range of its services and expertise to support its clients in a more accessible, comprehensive and efficient manner, across businesses and product areas.

Group Inc. is a bank holding company (BHC) and a financial holding company (FHC) regulated by the Board of Governors of the Federal Reserve System (FRB). Its U.S. depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank.

Business Segments

Goldman Sachs manages and reports its activities in three business segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Global Banking & Markets generates revenues from investment banking fees, including advisory, and equity and debt underwriting fees, Fixed Income, Currency and Commodities (FICC) intermediation and financing activities and Equities intermediation and financing activities, as well as relationship lending and acquisition financing (and related hedges) and investing activities related to its Global Banking & Markets activities. Asset & Wealth Management generates revenues from management and other fees, incentive fees, private banking and lending, equity investments and debt investments. Platform Solutions generates revenues from consumer platforms, and transaction banking and other platform businesses.

The chart below presents its three business segments and their revenue sources.

Prior to the fourth quarter of 2022, Goldman Sachs managed and reported its activities in the following fits business segments: Investment Banking, Global Markets, Asset Management and Consumer & Wealth Management. Beginning with the fourth quarter of 2022, consistent with its previously announced organizational changes, Goldman Sachs began managing and reporting its activities in three new segments: Global Banking & Markets, Asset & Wealth Management and Platform Solutions. Its new segments reflect the following primary changes:

• Global Banking & Markets is a new segment that includes the results previously reported in Investment Banking and Global Markets, and additionally includes the results from equity and debt investments related to its Global Banking & Markets activities, previously reported in Asset Management.
• Asset & Wealth Management is a new segment that includes the results previously reported in Asset Management and Wealth Management (previously included in Consumer & Wealth Management), and additionally includes the results from its direct-to-consumer banking business, which includes lending, deposit-taking and investing, previously reported in Consumer & Wealth Management, as well as the results from middle-market lending related to its asset management activities, previously reported in Investment Banking.
• Platform Solutions is a new segment that includes the results from its consumer platforms, such as partnerships offering credit cards and point-of-sale financing, previously reported in Consumer & Wealth Management, and the results from its transaction banking business, previously reported in Investment Banking.

Global Banking & Markets

Global Banking & Markets serves public and private sector clients and Goldman Sachs seek to develop and maintain long-term relationships with a diverse global group of institutional clients, including corporations, governments, states and municipalities. Its goal is to deliver to its institutional clients all of its resources in a seamless fashion, with its advisory and underwriting activities serving as the main initial point of contact. Goldman Sachs makes markets and facilitate client transactions in fixed income, currency, commodity and equity products and offer market expertise on a global basis. In addition, Goldman Sachs makes markets in, and clear client transactions on, major stock, options and futures exchanges worldwide. Its clients include companies that raise capital and funding to grow and strengthen their businesses, and engage in mergers and acquisitions, divestitures, corporate defence, restructurings and spin-offs, as well as companies that are professional market participants, who buy and sell financial products and manage risk, and investment entities whose ultimate clients include individual investors investing for their retirement, buying insurance or saving surplus cash.

As a market maker, Goldman Sachs provides prices to clients globally across thousands of products in all major asset classes and markets. At times, Goldman Sachs takes the other side of transactions itself if a buyer or seller is not readily available, and at other times Goldman Sachs connect its clients to other parties who want to transact. Its willingness to make markets, commit capital and take risk in a broad range of products is crucial to its client relationships. Market makers provide liquidity and play a critical role in price discovery, which contributes to the overall efficiency of the capital markets. In connection with its market-making activities, Goldman Sachs maintains (i) market-making positions, typically for a short period of time, in response to, or in anticipation of, client demand, and (ii) positions to actively manage its risk exposures that arise from these market-making activities (collectively, inventory).

Goldman Sachs executes a high volume of transactions for its clients in large, highly liquid markets (such as markets for U.S. Treasury securities, stocks and certain agency mortgage pass-through securities). Goldman Sachs also executes transactions for its clients in less liquid markets (such as mid-cap corporate bonds, emerging market currencies and certain non-agency mortgage-backed securities) for spreads and fees that are generally somewhat larger than those charged in more liquid markets. Additionally, Goldman Sachs structures and executes transactions involving customized or tailor-made products that address its clients’ risk exposures, investment objectives or other complex needs, as well as derivative transactions related to client advisory and underwriting activities.

Through its global sales force, Goldman Sachs maintains relationships with its clients, receiving orders and distributing investment research, trading ideas, market information and analysis. Much of this connectivity between Goldman Sachs and its clients is maintained on technology platforms, including Marquee, and operates globally where markets are open for trading. Marquee provides institutional investors with market intelligence, risk analytics, proprietary datasets and trade execution across multiple asset classes.

Its businesses are supported by its Global Investment Research business, which, as of December 2022, provided fundamental research on approximately 3,000 companies worldwide and on approximately 50 national economies, as well as on industries, currencies and commodities.

Its activities are organized by asset class and include both “cash” and “derivative” instruments. “Cash” refers to trading the underlying instrument (such as a stock, bond or barrel of oil). “Derivative” refers to instruments that derive their value from underlying asset prices, indices, reference rates and other inputs, or a combination of these factors (such as an option, which is the right or obligation to buy or sell a certain bond, stock or other asset on a specified date in the future at a certain price, or an interest rate swap, which is the agreement to convert a fixed rate of interest into a floating rate or vice versa).

Global Banking & Markets generates revenues from the following:

Investment banking fees. Goldman Sachs provides advisory and underwriting services to its clients.

Investment banking fees includes the following:

• Advisory. Goldman Sachs has been a leader for many years in providing advisory services, including strategic advisory assignments with respect to mergers and acquisitions, divestitures, corporate defence activities, restructurings and spin-offs. In particular, Goldman Sachs help clients execute large, complex transactions for which Goldman Sachs provides multiple services, including cross-border structuring expertise. Goldman Sachs also assists its clients in managing their asset and liability exposures and their capital.
• Underwriting. Goldman Sachs helps companies raise capital to fund their businesses. As a financial intermediary, its job is to match the capital of its investing clients, who aim to grow the savings of millions of people, with the needs of its public and private sector clients, who need financing to generate growth, create jobs and deliver products and services. Its underwriting activities include public offerings and private placements of a wide range of securities and other financial instruments, including local and cross-border transactions and acquisition financing. Underwriting consists of the following:
  • Equity underwriting. Goldman Sachs underwrites common stock, preferred stock, convertible securities and exchangeable securities. Goldman Sachs regularly receives mandates for large, complex transactions and has held a leading position in worldwide public common stock offerings and worldwide initial public offerings for many years.
  • Debt underwriting. Goldman Sachs originates and underwrites various types of debt instruments, including investment-grade and high-yield debt, bank and bridge loans, including in connection with acquisition financing, and emerging- and growth-market debt, which may be issued by, among others, corporate, sovereign, municipal and agency issuers. In addition, Goldman Sachs underwrites and originates structured securities, which include mortgage-related securities and other asset-backed securities.

FICC. FICC generates revenues from intermediation and financing activities.

• FICC intermediation. Includes client execution activities related to making markets in both cash and derivative instruments, as detailed below.

Interest Rate Products. Government bonds (including inflation-linked securities) across maturities, other government-backed securities, and interest rate swaps, options and other derivatives.

Credit Products. Investment-grade and high-yield corporate securities, credit derivatives, exchange-traded funds (ETFs), bank and bridge loans, municipal securities, distressed debt and trade claims.

Mortgages. Commercial mortgage-related securities, loans and derivatives, residential mortgage-related securities, loans and derivatives (including U.S. government agency-issued collateralized mortgage obligations and other securities and loans), and other asset-backed securities, loans and derivatives.

Currencies. Currency options, spot/forwards and other derivatives on G-10 currencies and emerging-market products.

Commodities. Commodity derivatives and, to a lesser extent, physical commodities, involving crude oil and petroleum products, natural gas, agricultural, base, precious and other metals, electricity, including renewable power, environmental products and other commodity products.

• FICC financing. Includes secured lending to its clients through structured credit and asset-backed lending, including warehouse loans backed by mortgages (including residential and commercial mortgage loans), corporate loans and consumer loans (including auto loans and private student loans). Goldman Sachs also provides financing to clients through securities purchased under agreements to resell (resale agreements).

Equities. Equities generates revenues from intermediation and financing activities.

• Equities intermediation. Goldman Sachs makes markets in equity securities and equity-related products, including ETFs, convertible securities, options, futures and over-the-counter (OTC) derivative instruments. As a principal, Goldman Sachs facilitates client transactions by providing liquidity to its clients, including by transacting in large blocks of stocks or derivatives, requiring the commitment of its capital.

Goldman Sachs also structures and make markets in derivatives on indices, industry sectors, financial measures and individual company stocks. Goldman Sachs develops strategies and provides information about portfolio hedging and restructuring and asset allocation transactions for its clients. Goldman Sachs also works with its clients to create specially tailored instruments to enable sophisticated investors to establish or liquidate investment positions or undertake hedging strategies. Goldman Sachs is one of the leading participants in the trading and development of equity derivative instruments.

Its exchange-based market-making activities include making markets in stocks and ETFs, futures and options on major exchanges worldwide.

Goldman Sachs generates commissions and fees from executing and clearing institutional client transactions on major stock, options and futures exchanges worldwide, as well as OTC transactions. Goldman Sachs provide its clients with access to a broad spectrum of equity execution services, including electronic “low-touch” access and more complex “high-touch” execution through both traditional and electronic platforms, including Marquee.

• Equities financing. Includes prime brokerage and other equities financing activities, including securities lending, margin lending and swaps.

Goldman Sachs earns fees by providing clearing, settlement and custody services globally. In addition, Goldman Sachs provides its hedge fund and other clients with a technology platform and reporting that enables them to monitor their security portfolios and manage risk exposures.

Goldman Sachs provides services that principally involve borrowing and lending securities to cover institutional clients’ short sales and borrowing securities to cover its short sales and to make deliveries into the market. In addition, Goldman Sachs is an active participant in broker-to-broker securities lending and third-party agency lending activities.

Goldman Sachs provides financing to its clients for their securities trading activities through margin loans that are collateralized by securities, cash or other acceptable collateral. Goldman Sachs earns a spread equal to the difference between the amount Goldman Sachs pays for funds and the amount Goldman Sachs receives from its client.

Goldman Sachs executes swap transactions to provide its clients with exposure to securities and indices.

Goldman Sachs also provides securities-based loans to individuals.

Other. Goldman Sachs lends to corporate clients, including through relationship lending and acquisition financing. The hedges related to this lending and financing activity are also reported as part of Other. Other also includes equity and debt investing activities related to its Global Banking & Markets activities.

Asset & Wealth Management

Asset & Wealth Management provides investment services to help clients preserve and grow their financial assets and achieve their financial goals. Goldman Sachs provides these services to its clients, both institutional and individuals, including investors who primarily access its products through a network of third-party distributors around the world.

Goldman Sachs manages client assets across a broad range of investment strategies and asset classes, including equity, fixed income and alternative investments. Alternative investments primarily includes hedge funds, credit funds, private equity, real estate, currencies, commodities and asset allocation strategies. Its investment offerings include those managed on a fiduciary basis by its portfolio managers, as well as those managed by third-party managers. Goldman Sachs offers its investment solutions in a variety of structures, including separately managed accounts, mutual funds, private partnerships and other commingled vehicles.

Goldman Sachs also provides customised investment advisory solutions designed to address its clients’ investment needs. These solutions begin with identifying clients’ objectives and continue through portfolio construction, ongoing asset allocation and risk management and investment realisation. Goldman Sachs draws from a variety of third-party managers, as well as its proprietary offerings, to implement solutions for clients.

Goldman Sachs provides tailored wealth advisory services to clients across the wealth spectrum. Goldman Sachs operates globally serving individuals, families, family offices, and foundations and endowments. Its relationships are established directly or introduced through companies that sponsor financial wellness programs for their employees.

Goldman Sachs offers personalised financial planning to individuals inclusive of income and liability management, compensation and benefits analysis, trust and estate structuring, tax optimization, philanthropic giving, and asset protection. Goldman Sachs also provides customised investment advisory solutions, and offers structuring and execution capabilities in securities and derivative products across all major global markets. Goldman Sachs leverages a broad, open-architecture investment platform and its global execution capabilities to help clients achieve their investment goals. In addition, Goldman Sachs offers clients a full range of private banking services, including a variety of deposit alternatives and loans that its clients use to finance investments in both financial and nonfinancial assets, bridge cash flow timing gaps or provide liquidity and flexibility for other needs.

In addition to managing client assets, Goldman Sachs invests in alternative investments across a range of asset classes that seek to deliver long-term accretive risk-adjusted returns. Its investing activities, which are typically longer-term, include investments in corporate equity, credit, real estate and infrastructure assets.

Goldman Sachs also raises deposits and has issued unsecured loans to consumers through Marcus by Goldman Sachs (Marcus). Goldman Sachs has started a process to cease offering new loans through Marcus.

Asset & Wealth Management generates revenues from the following:

• Management and other fees. Goldman Sachs receives fees related to managing assets for institutional and individual clients, providing investing and wealth advisory solutions, providing financial planning and counseling services via Ayco Personal Financial Management, and executing brokerage transactions for wealth management clients. The fees that Goldman Sachs charge vary by asset class, client channel and the types of services provided, and are affected by investment performance, as well as asset inflows and redemptions.
• Incentive fees. In certain circumstances, Goldman Sachs also receives incentive fees based on a percentage of a fund’s or a separately managed account's return, or when the return exceeds a specified benchmark or other performance targets. Such fees include overrides, which consist of the increased share of the income and gains derived primarily from its private equity and credit funds when the return on a fund’s investments over the life of the fund exceeds certain threshold returns.
• Private banking and lending. Its private banking and lending activities include issuing loans to its wealth management clients. Such loans are generally secured by commercial and residential real estate, securities and other assets. Goldman Sachs also accepts deposits (including savings and time deposits) from wealth management clients, including through Marcus, in GS Bank USA and Goldman Sachs International Bank (GSIB). Goldman Sachs has also issued unsecured loans to consumers through Marcus and have started a process to cease offering new loans. Additionally, Goldman Sachs provides investing services through Marcus Invest to U.S. customers. Private banking and lending revenues include net interest income allocated to deposits and net interest income earned on loans to individual clients.
• Equity investments. Includes investing activities related to its asset management activities primarily related to public and private equity investments in corporate, real estate and infrastructure assets. Goldman Sachs also makes investments through consolidated investment entities, substantially all of which are engaged in real estate investment activities.
• Debt investments. Includes lending activities related to its asset management activities, including investing in corporate debt, lending to middle-market clients, and providing financing for real estate and other assets. These activities include investments in mezzanine debt, senior debt and distressed debt securities.

Platform Solutions

Platform Solutions includes its consumer platforms, such as partnerships offering credit cards and point-of-sale financing, and transaction banking and other platform businesses.

Platform Solutions generates revenues from the following:

Consumer platforms. Its Consumer platforms business issues credit cards and provides point-of-sale financing to consumers to finance the purchases of goods or services. Consumer platforms revenues primarily includes net interest income earned on credit card lending and point-of-sale financing activities.

Transaction banking and other. Goldman Sachs provide transaction banking and other services, including cash management services, such as deposit-taking and payment solutions for corporate and institutional clients. Transaction banking revenues include net interest income attributed to transaction banking deposits.

Business Continuity and Information Security

Business continuity and information security, including cybersecurity, are high priorities for us. Their importance has been highlighted by (i) the coronavirus (COVID-19) pandemic and the work-from-home arrangements implemented by companies worldwide in response, including us, (ii) numerous highly publicized events in recent years, including cyber attacks against financial institutions, governmental agencies, large consumer-based companies, software and information technology service providers and other organizations, some of which have resulted in the unauthorized access to or disclosure of personal information and other sensitive or confidential information, the theft and destruction of corporate information and requests for ransom payments, and (iii) extreme weather events.

Its Business Continuity & Technology Resilience Program has been developed to provide reasonable assurance of business continuity in the event of disruptions at its critical facilities or of its systems, and to comply with regulatory requirements, including those of FINRA. Because Goldman Sachs is a BHC, its Business Continuity & Technology Resilience Program is also subject to review by the FRB. The key elements of the program are crisis management, business continuity, technology resilience, business recovery, assurance and verification, and process improvement. In the area of information security, Goldman Sachs have developed and implemented a framework of principles, policies and technology designed to protect the information provided to us by its clients and its own information from cyber attacks and other misappropriation, corruption or loss. Safeguards are designed to maintain the confidentiality, integrity and availability of information.

Human Capital Management

Its people are its greatest asset. Goldman Sachs believe that a major strength and principal reason for its success is the quality, dedication, determination and collaboration of its people, which enables us to serve its clients, generate long-term value for its shareholders and contribute to the broader community. Goldman Sachs invests heavily in developing and supporting its people throughout their careers, and Goldman Sachs strives to maintain a work environment that fosters professionalism, excellence, high standards of business ethics, diversity, teamwork and cooperation among its employees worldwide.

Diversity and Inclusion

The strength of its culture, its ability to execute its strategy, and its relationships with clients all depend on a diverse workforce and an inclusive work environment that encourages a wide range of perspectives. Goldman Sachs believes that diversity at all levels of its organization, from entry-level analysts to senior management, as well as the Board of Directors of Group Inc. (Board) is essential to its sustainability. As of December 2022, approximately 57% of its Board was diverse by race, gender or sexual orientation. Its management team works closely with its Global Inclusion and Diversity Committee to continue to increase diversity of its global workforce at all levels. In addition, Goldman Sachs has Inclusion and Diversity Committees across regions, which promote an environment that values different perspectives, challenges conventional thinking and maximizes the potential of all its people.

Goldman Sachs believes that increased diversity, including diversity of experience, gender identity, race, ethnicity, sexual orientation, disability and veteran status, in addition to being a social imperative, is vital to its commercial success through the creativity that it fosters. For this reason, Goldman Sachs has established a comprehensive action plan with aspirational diversity hiring and representation goals which are set forth below and are focused on cultivating an inclusive environment for all its colleagues.

Diverse leadership is crucial to its long-term success and to driving innovation, and Goldman Sachs have implemented and expanded outreach and career advancement programs for rising diverse executive talent. For example, Goldman Sachs are focused on providing diverse vice presidents the necessary coaching, sponsorship and advocacy to support their career trajectories and strengthen their leadership platforms, including through programs, such as its Vice President Sponsorship Initiative focused on high-performing women, Black, Hispanic/Latinx, Asian and LGBTQ+ vice presidents across the globe. Many other career development initiatives are aimed at fostering diverse talent at the analyst and associate level, including the Black Analyst and Associate Initiative, the Hispanic/Latinx Analyst Initiative and the Women’s Career Strategies Initiative. Its global and regional Inclusion Networks and Interest Forums are open to all professionals at Goldman Sachs to promote and advance connectivity, understanding, inclusion and diversity.

Progress Toward Aspirational Goals. Reflecting its efforts to increase diversity, the composition of its most recent partnership class was 29% women professionals, 24% Asian professionals, 9% Black professionals, 3% Hispanic/Latinx professionals, 3% LGBTQ+ professionals and 3% professionals who are military/veterans. The composition of its most recent managing director class was 30% women professionals, 28% Asian professionals, 5% Black professionals, 5% Hispanic/Latinx professionals, 3% LGBTQ+ professionals and 3% professionals who are military/veterans.

Goldman Sachs has also set forth the following aspirational goals:

• Goldman Sachs aims for analyst and associate hiring (which accounts for over 70% of its annual hiring) to achieve representation of 50% women professionals, 11% Black professionals and 14% Hispanic/Latinx professionals in the Americas, and 9% Black professionals in the U.K. In 2022, its analyst and associate hires included 44% women professionals, 10% Black professionals and 13% Hispanic/Latinx professionals in the Americas, and 17% Black professionals in the U.K.
• Goldman Sachs aims for women professionals to represent 40% of its vice presidents globally by 2025 and 30% of senior talent (vice presidents and above) in the U.K. by 2023, while also endeavoring for women employees to comprise 50% of all of its employees globally over time. As of December 2022, women professionals represented 33% of its vice president population globally and 31% of senior talent (vice presidents and above) in the U.K., and women employees represented 41% of all of its employees globally.
• Goldman Sachs aims for Black professionals to represent 7% of its vice president population in the Americas and in the U.K., and for Hispanic/Latinx professionals to represent 9% of its vice president population in the Americas, both by 2025. As of December 2022, Black professionals represented 4% of its vice president population in the Americas and 5% in the U.K., and Hispanic/Latinx professionals represented 6% of its vice president population in the Americas.
• Goldman Sachs aims to double the number of campus hires in the U.S. recruited from Historically Black Colleges and Universities (HBCUs) by 2025 relative to 2020.

The metrics above are based on self-identification.

Talent Development and Retention

Goldman Sachs seeks to help its people achieve their full potential by investing in them and supporting a culture of continuous development. Its goals are to maximize individual capabilities, increase commercial effectiveness and innovation, reinforce its culture, expand professional opportunities, and help its people contribute positively to their communities.

Instilling its culture in all employees is a continuous process, in which training plays an important part. Goldman Sachs offers its employees the opportunity to participate in ongoing educational offerings and periodic seminars facilitated by its Learning & Engagement team. To accelerate their integration into the firm and its culture, new hires have the opportunity to receive training before they start working and orientation programs with an emphasis on culture and networking, and nearly all employees participate in at least one training event each year. For its more senior employees, Goldman Sachs provide guidance and training on how to manage people and projects effectively, exhibit strong leadership and exemplify its culture. Goldman Sachs are also focused on developing a high performing, diverse leadership pipeline and career planning for its next generation of leaders. Goldman Sachs maintain a variety of programs aimed at employees’ professional growth and leadership development, including initiatives, such as its Vice President and Managing Director Leadership Acceleration Initiatives and Partner Development Initiative.

Enhancing its people’s experience of internal mobility is a key focus, as Goldman Sachs believe that this will inspire employees, help retain top talent and create diverse experiences to build future leaders.

Another important part of instilling its culture is its employee performance review process. Employees are reviewed by supervisors, co-workers and employees whom they supervise in a 360-degree review process that is integral to its team approach and includes an evaluation of an employee’s performance with respect to risk management, protecting its reputation, adherence to its code of conduct, compliance, and diversity and inclusion principles. Its approach to evaluating employee performance centers on providing robust, timely and actionable feedback that facilitates professional development. Goldman Sachs have directed its managers, as leaders at the firm, to take an active coaching role with their teams. Goldman Sachs have also implemented “The Three Conversations at GS” through which managers establish goals with their team members at the start of the year, check in mid-year on progress and then close out the year with a conversation on performance against goals.

Goldman Sachs believe that its people value opportunities to contribute to their communities and that these opportunities enhance their job satisfaction. Goldman Sachs also believe that being able to volunteer together with colleagues and support community organizations through completing local service projects strengthens its people’s bond with us. Community TeamWorks, its signature volunteering initiative, enables its people to participate in high-impact, team-based volunteer opportunities, including projects coordinated with hundreds of non-profit partner organizations worldwide. During 2022, its people volunteered approximately 86,000 hours of service globally through Community TeamWorks, with approximately 17,000 employees partnering with approximately 500 nonprofit organizations on approximately 1,200 community projects.

Wellness

Goldman Sachs recognises that for its people to be successful in the workplace they need support in their personal, as well as their professional, lives. Goldman Sachs has created a strong support framework for wellness, which is intended to enable employees to better balance their roles at work and their responsibilities at home. Goldman Sachs provide a number of policies for its employees that support taking time away from the office when needed, including 20 weeks of parental leave, family care leave and bereavement leave. In 2022, Goldman Sachs also enhanced its vacation policies for its employees, allowing managing directors to take time off, when needed, without a fixed vacation day entitlement and adding a minimum of two additional vacation days for all other employees, as well as setting a minimum annual expected vacation usage of 15 days. For longer-tenured employees, Goldman Sachs offer an unpaid sabbatical leave. Goldman Sachs also continue to advance its resilience programs, offering its people a range of counselling, coaching, medical advisory and personal wellness services. Goldman Sachs increased the availability of these resources during the COVID-19 pandemic, and continued to evolve and strengthen virtual offerings to enhance access to support, with the aim of maintaining the physical and mental well-being of its people, and enhancing their effectiveness and productivity.

In addition, to support the financial wellness of its employees, Goldman Sachs offer a variety of resources that help them manage their personal financial health and decision-making, including financial education information sessions, live and on-demand webinars, articles and interactive digital tools.

Global Reach and Strategic Locations

As a firm with a global client base, Goldman Sachs takes a strategic approach to attracting, developing and managing a global workforce. Its clients are located worldwide and Goldman Sachs are an active participant in financial markets around the world. As of December 2022, Goldman Sachs had headcount of 48,500, offices in over 35 countries and 52% of its headcount was based in the Americas, 19% in EMEA and 29% in Asia. Its employees come from over 180 countries and speak more than 150 languages as of December 2022.

In addition to maintaining offices in major financial centres around the world, Goldman Sachs has established key strategic locations, including in Bengaluru, Salt Lake City, Dallas, Singapore, Warsaw and Hyderabad. Goldman Sachs continue to evaluate the expanded use of strategic locations, including cities in which Goldman Sachs do not currently have a presence.

As of December 2022, 41% of its employees were working in strategic locations. Goldman Sachs believes its investment in these strategic locations enables us to build centres of excellence around specific capabilities that support its business initiatives.

Sustainability

Goldman Sachs have a long-standing commitment to sustainability. Its two priorities in this area are helping clients across industries decarbonize their businesses to support their transition to a low-carbon economy (Climate Transition) and to advance solutions that expand access, increase affordability, and drive outcomes to support sustainable economic growth (Inclusive Growth). Its strategy is to advance these two priorities through its work with its clients, and with strategic partners whose strengths and areas of focus complement its own, as well as through its supply chain.

Goldman Sachs have established a Sustainable Finance Group, which serves as the centralized group that drives climate strategy and sustainability efforts across its firm, including commercial efforts alongside its businesses, to advance Climate Transition and Inclusive Growth. Goldman Sachs have also created the role of Global Head of Sustainability and Inclusive Growth, which, like its One Goldman Sachs initiative, is intended to facilitate the application of its full capabilities across both Climate Transition and Inclusive Growth. Its sustainable finance-related efforts continue to evolve. For example, Goldman Sachs recently launched the Sustainable Banking Group, a group focused on supporting its corporate clients in reducing their direct and indirect carbon emissions.

Its activities relating to sustainability present both financial and nonfinancial risks, and Goldman Sachs have processes for managing these risks, similar to the other risks Goldman Sachs face. Goldman Sachs have integrated oversight of climate-related risks into its risk management governance structure, from senior management to its Board and its committees, including the Risk and Public Responsibilities committees. The Risk Committee of the Board oversees firmwide financial and nonfinancial risks, which include climate risk, and, as part of its oversight, receives updates on its risk management approach to climate risk. The Public Responsibilities Committee of the Board assists the Board in its oversight of its firmwide sustainability strategy and sustainability risks affecting us, including with respect to climate change. As part of its oversight, the Public Responsibilities Committee receives periodic updates on its sustainability strategy, and also periodically reviews its governance and related policies and processes for sustainability and climate change-related risks. Goldman Sachs have also implemented an Environmental Policy Framework to guide its overall approach to sustainability issues. Goldman Sachs apply this Framework when evaluating transactions for environmental and social risks and impacts. Its employees also receive training with respect to environmental and social risks, including for sectors and industries that Goldman Sachs believe have higher potential for these risks. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Other Risk Management — Climate Risk Management” in Part II, Item 7 of this Form 10-K for further information about its climate risk management.

As a leading financial institution, Goldman Sachs acknowledge the importance of Climate Transition and Inclusive Growth for its business. In February 2021, Goldman Sachs issued its inaugural sustainability bond of $800 million, and in June 2022 Goldman Sachs issued its second benchmark sustainability bond of $700 million. These issuances align with its sustainable finance framework for future issuances and fund a range of on-balance sheet sustainable finance activity. Goldman Sachs believe Goldman Sachs can advance sustainability by partnering with its clients across its businesses, including by developing new sustainability-linked financing solutions, offering strategic advice, or co-investing alongside its clients in clean energy companies. Goldman Sachs have announced a target to deploy $750 billion in sustainable financing, investing and advisory activity by the beginning of 2030. As of December 2022, Goldman Sachs achieved approximately 55% of that goal, with the majority dedicated to Climate Transition.

With respect to Climate Transition, Goldman Sachs have announced its commitment to align its financing activities with a net-zero-by-2050 pathway. In that context, Goldman Sachs have set an initial set of targets for 2030 focused on three sectors — power, oil and gas, and auto manufacturing — where Goldman Sachs see an opportunity to proactively engage its clients and investors, deploy capital required for transition, and invest in new commercial solutions to drive decarbonization in the real economy. Carbon neutrality is also a priority for the operation of its firm and its supply chain. In 2015, Goldman Sachs achieved carbon neutrality in its operations and business travel, ahead of its 2020 goal announced in 2009. Goldman Sachs have expanded its operational carbon commitment to include its supply chain, targeting net-zero carbon emissions by 2030.

In addition to Climate Transition, its approach to sustainability also centres on Inclusive Growth where Goldman Sachs seek to drive solutions that expand access, increase affordability, and drive outcomes to advance sustainable economic growth. Goldman Sachs have sponsored initiatives, such as One Million Black Women, Launch With GS, the Urban Investment Group, 10,000 Women and 10,000 Small Businesses. An overarching theme of its sustainability strategy is promoting diversity and inclusion as an imperative for us, as well as for its clients and their boards. These efforts are further strengthened by strategic partnerships that Goldman Sachs have established in areas where Goldman Sachs have identified gaps or believe Goldman Sachs are able to drive even greater impact through collaboration. Goldman Sachs believe its ability to achieve its sustainability objectives is critically dependent on the strengths and talents of its people, and Goldman Sachs recognize that its people are able to maximize their impact by collaborating in a diverse and inclusive work environment. See “Business — Human Capital Management” for information about its human capital management goals, programs and policies.

Competition

The financial services industry and all of its businesses are intensely competitive, and Goldman Sachs expects them to remain so. Its competitors provide investment banking, market-making and asset management services, private banking and lending, commercial lending, point-of-sale financing, credit cards, transaction banking, deposit-taking and other banking products and services, and make investments in securities, commodities, derivatives, real estate, loans and other financial assets. Its competitors include brokers and dealers, investment banking firms, commercial banks, credit card issuers, insurance companies, investment advisers, mutual funds, hedge funds, private equity funds, merchant banks, consumer finance companies and financial technology and other internet-based companies. Some of its competitors operate globally and others regionally, and Goldman Sachs competes based on a number of factors, including transaction execution, client experience, products and services, innovation, reputation and price.

Goldman Sachs has faced, and expects to continue to face, pressure to retain market share by committing capital to businesses or transactions on terms that offer returns that may not be commensurate with their risks. In particular, corporate clients seek such commitments (such as agreements to participate in their loan facilities) from financial services firms in connection with investment banking and other assignments.

Consolidation and convergence have significantly increased the capital base and geographic reach of some of its competitors and have also hastened the globalization of the securities and other financial services markets. As a result, Goldman Sachs have had to commit capital to support its international operations and to execute large global transactions. To capitalize on some of its most significant opportunities, Goldman Sachs will have to compete successfully with financial institutions that are larger and have more capital and that may have a stronger local presence and longer operating history outside the U.S.

Goldman Sachs also competes with smaller institutions that offer more targeted services, such as independent advisory firms. Some clients may perceive these firms to be less susceptible to potential conflicts of interest than Goldman Sachs are, and, as described below, its ability to effectively compete with them could be affected by regulations and limitations on activities that apply to Goldman Sachs but may not apply to them.

A number of its businesses are subject to intense price competition. Efforts by its competitors to gain market share have resulted in pricing pressure in its investment banking, market-making, consumer, wealth management and asset management businesses. For example, the increasing volume of trades executed electronically, through the internet and through alternative trading systems, has increased the pressure on trading commissions, in that commissions for electronic trading are generally lower than those for non-electronic trading. It appears that this trend toward low-commission trading will continue. Price competition has also led to compression in the difference between the price at which a market participant is willing to sell an instrument and the price at which another market participant is willing to buy it (i.e., bid/offer spread), which has affected its market-making businesses. The increasing prevalence of passive investment strategies that typically have lower fees than other strategies Goldman Sachs offers has affected the competitive and pricing dynamics for its asset management products and services. In addition, Goldman Sachs believes that Goldman Sachs will continue to experience competitive pressures in these and other areas in the future as some of its competitors seek to obtain market share by further reducing prices, and as Goldman Sachs enters into or expand its presence in markets that rely more heavily on electronic trading and execution. Goldman Sachs and other banks also compete for deposits on the basis of the rates Goldman Sachs offer. Increases in short-term interest rates have resulted in and are expected to continue to result in more intense competition in deposit pricing.

Goldman Sachs also competes on the basis of the types of financial products and client experiences that Goldman Sachs and its competitors offer. In some circumstances, its competitors may offer financial products that Goldman Sachs does not offer and that its clients may prefer, including cryptocurrencies and other digital assets that Goldman Sachs cannot or may choose not to provide. Its competitors may also develop technology platforms that provide a better client experience.

The provisions of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the requirements promulgated by the Basel Committee on Banking Supervision (Basel Committee) and other financial regulations could affect its competitive position to the extent that limitations on activities, increased fees and compliance costs or other regulatory requirements do not apply, or do not apply equally, to all of its competitors or are not implemented uniformly across different jurisdictions. For example, the provisions of the Dodd-Frank Act that prohibit proprietary trading and restrict investments in certain hedge and private equity funds differentiate between U.S.-based and non-U.S.-based banking organizations and give non-U.S.-based banking organizations greater flexibility to trade outside of the U.S. and to form and invest in funds outside the U.S.

Likewise, the obligations with respect to derivative transactions under Title VII of the Dodd-Frank Act depend, in part, on the location of the counterparties to the transaction. The impact of regulatory developments on its competitive position has depended and will continue to depend to a large extent on the manner in which the required rulemaking and regulatory guidance evolve, the extent of international convergence, and the development of market practice and structures under the evolving regulatory regimes, as described further in “Regulation” below.

Goldman Sachs also face intense competition in attracting and retaining qualified employees. Its ability to continue to compete effectively has depended and will continue to depend upon its ability to attract new employees, retain and motivate its existing employees and to continue to compensate employees competitively amid intense public and regulatory scrutiny on the compensation practices of large financial institutions. Its pay practices and those of certain of its competitors are subject to review by, and the standards of, the FRB and other regulators inside and outside the U.S., including the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in the U.K. Goldman Sachs also compete for employees with institutions whose pay practices are not subject to regulatory oversight. See “Regulation — Compensation Practices” and “Risk Factors — Competition — Its businesses would be adversely affected if Goldman Sachs are unable to hire and retain qualified employees” in Part I, Item 1A of this Form 10-K for further information about such regulation.

Regulation

As a participant in the global financial services industry, Goldman Sachs are subject to extensive regulation and supervision worldwide. The regulatory regimes applicable to its operations have been, and continue to be, subject to significant changes.

New regulations have been adopted or are being considered by regulators and policy makers worldwide, as described below. The impacts of any changes to the regulations affecting its businesses, including as a result of the proposals described below, are uncertain and will not be known until such changes are finalized and market practices and structures develop under the revised regulations.

Group Inc. is a BHC under the U.S. Bank Holding Company Act of 1956 (BHC Act) and an FHC under amendments to the BHC Act effected by the U.S. Gramm-Leach-Bliley Act of 1999 (GLB Act), and is subject to supervision and examination by the FRB, which is its primary regulator.

Under the system of “functional regulation” established under the GLB Act, the primary regulators of its U.S. non-bank subsidiaries directly regulate the activities of those subsidiaries, with the FRB exercising a supervisory role. Such “functionally regulated” subsidiaries include broker-dealers and security-based swap dealers registered with the SEC, such as its principal U.S. broker-dealer, entities registered with or regulated by the CFTC with respect to futures-related and swaps-related activities and investment advisers registered with the SEC with respect to their investment advisory activities.

Its principal subsidiaries operating in the U.S. include GS Bank USA, Goldman Sachs & Co., LLC (GS&Co.), J. Aron & Company LLC (J. Aron) and Goldman Sachs Asset Management, L.P.

GS Bank USA is its principal U.S. bank subsidiary and is supervised and regulated by the FRB, the FDIC, the New York State Department of Financial Services (NYDFS) and the Consumer Financial Protection Bureau (CFPB). GS Bank USA also has a London branch, which is regulated by the FCA and PRA, and a Tokyo branch, which is regulated by the Japan Financial Services Agency. Goldman Sachs conduct a number of its activities partially or entirely through GS Bank USA and its subsidiaries, including: corporate loans (including leveraged lending); securities-based and collateralized loans; consumer loans (including installment loans, such as point-of-sale loans, and credit card loans); small business loans (including installment, lines of credit and credit cards); residential mortgages; transaction banking; deposit-taking; interest rate, credit, currency and other derivatives; and agency lending.

GS&Co. is its principal U.S. broker-dealer and is registered as a broker-dealer, a securities-based swap dealer, a municipal advisor and an investment adviser with the SEC and as a broker-dealer in all 50 states and the District of Columbia. U.S. self-regulatory organizations, such as FINRA and the NYSE, have adopted rules that apply to, and examine, broker-dealers such as GS&Co.

Its principal subsidiaries operating in Europe include: Goldman Sachs International (GSI), GSIB and Goldman Sachs Asset Management International (GSAMI); Goldman Sachs Bank Europe SE (GSBE); and Goldman Sachs Paris Inc. et Cie (GSPIC).

Its E.U. subsidiaries are subject to various E.U. regulations, as well as national laws, including those implementing European directives. GSBE is directly supervised by the European Central Bank (ECB) and additionally by BaFin and Deutsche Bundesbank in the context of the E.U. Single Supervisory Mechanism (SSM). GSBE’s London branch is regulated by the FCA. GSBE engages in certain activities primarily in the E.U., including underwriting and market making in debt and equity securities and derivatives, investment, asset and wealth management services, deposit-taking, lending (including securities lending), and financial advisory services. GSBE is also a primary dealer for government bonds issued by E.U. sovereigns. As a foreign bank subsidiary of GS Bank USA, GSBE is subject to limits on the nature and scope of its activities under the FRB’s Regulation K, including limits on its underwriting and market making in equity securities based on GSBE’s and/or GS Bank USA’s capital.

GSPIC is an investment firm regulated by the French Prudential Supervision and Resolution Authority (ACPR) and the French Financial Markets Authority. GSPIC’s activities include certain activities that GSBE is prevented from undertaking. GSPIC's application to ACPR in October 2021 to become a credit institution remains pending.

GSI is a U.K. broker-dealer and a designated investment firm, and GSIB is a U.K. bank. Both GSI and GSIB are regulated by the PRA and the FCA. As an investment firm, GSI is subject to prudential requirements applicable to banks, including capital and liquidity requirements. GSI provides broker-dealer services in and from the U.K. and is registered with the CFTC as a swap dealer and with the SEC as a securities-based swap dealer. GSIB engages in lending (including securities lending) and deposit-taking activities and is a primary dealer for U.K. government bonds. GSI and GSIB maintain branches outside of the U.K. and are subject to the laws and regulations of the jurisdictions where they are located.

Its principal subsidiary operating in Asia is Goldman Sachs Japan Co., Ltd. (GSJCL). GSJCL is its regulated Japanese broker-dealer subsidiary and is regulated by Japan’s Financial Services Agency, the Tokyo Stock Exchange, the Bank of Japan and the Ministry of Finance, among others.

Banking Supervision and Regulation

The Basel Committee is the primary global standard setter for prudential bank regulation. However, the Basel Committee’s standards do not become effective in a jurisdiction until the relevant regulators have adopted rules to implement its standards. The implications of Basel Committee standards and related regulations for its businesses depend to a large extent on their implementation by the relevant regulators globally, and the market practices and structures that develop.

Capital and Liquidity Requirements. Goldman Sachs and GS Bank USA are subject to regulatory risk-based capital and leverage requirements that are calculated in accordance with the regulations of the FRB (Capital Framework). The Capital Framework is largely based on the Basel Committee’s framework for strengthening the regulation, supervision and risk management of banks (Basel III) and also implements certain provisions of the Dodd-Frank Act. Under the U.S. federal bank regulatory agencies’ tailoring framework, Goldman Sachs and GS Bank USA are subject to “Category I” standards because Goldman Sachs have been designated as a global systemically important bank (G-SIB). Accordingly, Goldman Sachs and GS Bank USA are “Advanced approach” banking organizations. Under the Capital Framework, Goldman Sachs and GS Bank USA must meet specific regulatory capital requirements that involve quantitative measures of assets, liabilities and certain off-balance sheet items. The sufficiency of its capital levels is also subject to qualitative judgments by regulators. Goldman Sachs and GS Bank USA are also subject to liquidity requirements established by the U.S. federal bank regulatory agencies.

GSBE is subject to capital and liquidity requirements prescribed in the E.U. Capital Requirements Regulation, as amended (CRR), and the E.U. Capital Requirements Directive, as amended (CRD), which are largely based on Basel III. The most recent amendments to the CRR and CRD (respectively, CRR II and CRD V) include changes to the liquidity, market risk, counterparty credit risk, large exposures and leverage ratio frameworks. These changes have been applicable in the E.U. since June 2021. From June 2022, the CRR requires large institutions with securities traded on a regulated market of a member state to make qualitative and quantitative disclosures relating to environmental, social and governance risks on an annual basis. Under an E.U. proposal, these requirements would apply to its E.U.-regulated entities beginning in January 2025.

GSI and GSIB are subject to the U.K. capital and liquidity frameworks, which are also largely based on Basel III and are predominantly aligned with the E.U. capital and liquidity frameworks. The most recent amendments to the U.K. frameworks include changes to the liquidity, counterparty credit risk, large exposures and leverage ratio frameworks. The changes have been applicable in the U.K. since January 2022.

Risk-Based Capital Ratios. As Advanced approach banking organizations, Goldman Sachs and GS Bank USA calculate risk-based capital ratios in accordance with both the Standardized and Advanced Capital Rules. Both the Advanced Capital Rules and the Standardized Capital Rules include minimum risk-based capital requirements and additional capital conservation buffer requirements that must be satisfied solely with Common Equity Tier 1 (CET1) capital. Failure to satisfy a buffer requirement in full would result in constraints on capital distributions and discretionary executive compensation. The severity of the constraints would depend on the amount of the shortfall and the organization’s “eligible retained income,” defined as the greater of (i) net income for the fits preceding quarters, net of distributions and associated tax effects not reflected in net income; and (ii) the average of net income over the preceding fits quarters. For Group Inc., the capital conservation buffer requirements consist of a 2.5% buffer (under the Advanced Capital Rules), a stress capital buffer (SCB) (under the Standardized Capital Rules), and both a countercyclical buffer and the G-SIB surcharge (under both Capital Rules). For GS Bank USA, the capital conservation buffer requirements consist of a 2.5% buffer and the countercyclical capital buffer.

The SCB is based on the results of the Federal Reserve’s supervisory stress tests and its planned common stock dividends and is likely to change over time based on the results of the annual supervisory stress tests. See “Stress Tests and Capital Planning” below. The countercyclical capital buffer is designed to counteract systemic vulnerabilities and currently applies only to banking organizations subject to Category I, II or III standards, including us and GS Bank USA. Several other national supervisors also require countercyclical capital buffers. The G-SIB surcharge and countercyclical capital buffer applicable to us may change in the future, including due to additional guidance from its regulators and/or positional changes. As a result, the minimum capital ratios to which Goldman Sachs are subject are likely to change over time.

The U.S. federal bank regulatory agencies have a rule that implements the Basel Committee’s standardized approach for measuring counterparty credit risk exposures in connection with derivative contracts (SA-CCR). Under the rule, “Advanced approach” banking organizations are required to use SA-CCR for calculating their standardized risk-weighted assets (RWAs) and, with some adjustments, for purposes of determining their supplementary leverage ratios (SLRs) discussed below.

The capital requirements applicable to GSBE, GSI and GSIB include both minimum requirements and buffers. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital” in Part II, Item 7 of this Form 10‑K and Note 20 to the consolidated financial statements in Part II, Item 8 of this Form 10‑K for information about its capital ratios and those of GS Bank USA, GSBE, GSI and GSIB.

The Basel Committee standards include guidelines for calculating incremental capital ratio requirements for banking institutions that are systemically significant from a domestic but not global perspective (D-SIBs). Depending on how these guidelines are implemented by national regulators, they may apply, among others, to certain subsidiaries of G-SIBs. These guidelines are in addition to the framework for G-SIBs, but are more principles-based. The U.S. federal bank regulatory agencies have not designated any D-SIBs. The CRD and CRR provide that institutions that are systemically important at the E.U. or member state level, known as other systemically important institutions (O-SIIs), may be subject to additional capital ratio requirements, according to their degree of systemic importance (O-SII buffers). BaFin has identified GSBE as an O-SII in Germany and set an O-SII buffer.

In the U.K., the PRA has identified Goldman Sachs Group UK Limited (GSG UK), the parent company of GSI and GSIB, as an O-SII but has not applied an O-SII buffer.

The Basel Committee has finalized revisions to the framework for calculating capital requirements for market risk as part of its Fundamental Review of the Trading Book (FRTB). These revisions are expected to increase market risk capital requirements for most banking organizations and large broker-dealers subject to bank capital requirements. The revised framework, among other things, revises the standardized and internal model-based approaches used to calculate market risk requirements and clarifies the scope of positions subject to market risk capital requirements. The Basel Committee framework contemplates that national regulators will have implemented the revised framework by January 1, 2023. The U.S. federal bank regulatory agencies have not yet proposed rules implementing the revised framework. Under the CRR, E.U. financial institutions, including GSBE, commenced reporting their market risk calculations under the revised framework in the third quarter of 2021. In November 2022, the PRA issued a consultation paper to implement this framework.

The Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (Basel III Revisions). These standards set a floor on internally modeled capital requirements at a percentage of the capital requirements under the standardized approach. They also revise the Basel Committee’s standardized and internal model-based approaches for credit risk, provide a new standardized approach for operational risk capital and revise the frameworks for credit valuation adjustment (CVA) risk. The Basel Committee framework contemplates that national regulators will have implemented these standards and that the new floor will be phased in through January 1, 2028. The U.S. federal bank regulatory authorities have not yet proposed rules implementing the Basel III Revisions for purposes of their risk-based capital ratios. The European Commission proposed rules to implement the Basel III Revisions in October 2021 and in November 2022, the Council of the E.U. adopted its general approach on implementing the Basel III revisions. The proposed E.U. rules contemplate amendments to the CRR and the CRD, referred to as CRR III and CRD VI, generally taking effect in January 2025. In November 2022, the PRA issued a consultation on the implementation of the Basel III Revisions, with a proposed January 2025 effective date. Under the PRA consultation, its U.K. subsidiaries are not expected to be subject to a floor on internally modeled capital requirements.

The Basel Committee has published an updated securitization framework and a revised G-SIB assessment methodology, but the U.S. federal bank regulatory agencies have not yet proposed rules implementing them. The updated securitization framework has been implemented in the E.U. and U.K.

In December 2022, the Basel Committee published a final standard on the prudential treatment of cryptoasset exposures. The Basel Committee contemplates that national regulators will have incorporated the standard into local capital requirements by January 1, 2025. U.S. federal bank regulatory agencies and E.U. and U.K. authorities have not yet proposed rules implementing the standards.

Leverage Ratios. Under the Capital Framework, Goldman Sachs and GS Bank USA are subject to Tier 1 leverage ratios and SLRs established by the FRB. As a G-SIB, the SLR requirements applicable to us include both a minimum requirement and a buffer requirement, which operates in the same manner as the risk-based buffer requirements described above. In April 2018, the FRB and the OCC issued a proposed rule which would (i) replace the current 2% SLR buffer for G-SIBs, including us, with a buffer equal to 50% of their G-SIB surcharge and (ii) revise the 6% SLR requirement for Category I banks, such as GS Bank USA, to be “well capitalized” with a requirement equal to 3% plus 50% of their parent’s G-SIB surcharge. This proposal, together with the adopted rule requiring use of SA-CCR for purposes of calculating the SLR, would implement certain of the revisions to the leverage ratio framework published by the Basel Committee in December 2017.

GSBE and certain of its U.K. entities are also subject to requirements relating to leverage ratios, which are generally based on the Basel Committee leverage ratio standards.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital” in Part II, Item 7 of this Form 10-K and Note 20 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for information about its and GS Bank USA’s Tier 1 leverage ratios and SLRs, and GSI’s leverage ratio.

Liquidity Ratios. The Basel Committee’s framework for liquidity risk measurement, standards and monitoring requires banking organizations to measure their liquidity against two specific liquidity tests: the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR).

The LCR rule issued by the U.S. federal bank regulatory agencies and applicable to both us and GS Bank USA is generally consistent with the Basel Committee’s framework and is designed to ensure that a banking organization maintains an adequate level of unencumbered, high-quality liquid assets equal to or greater than the expected net cash outflows under an acute short-term liquidity stress scenario. Goldman Sachs and GS Bank USA are required to maintain a minimum LCR of 100%. See “Available Information” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Liquidity Risk Management — Liquidity Regulatory Framework” in Part II, Item 7 of this Form 10-K for information about its average daily LCR.

GSBE is subject to the LCR rule approved by the European Parliament and Council, and GSI and GSIB are subject to the rules approved by the U.K. regulatory authorities' LCR rules. These rules are generally consistent with the Basel Committee’s framework.

The NSFR is designed to promote medium- and long-term stable funding of the assets and off-balance sheet activities of banking organizations over a one-year time horizon. The Basel Committee’s NSFR framework requires banking organizations to maintain a minimum NSFR of 100%.

Goldman Sachs are subject to the U.S. NSFR rule and Goldman Sachs will be required to publicly disclose its quarterly average daily NSFR semi-annually. Goldman Sachs will begin doing so in August 2023. The CRR implements the NSFR for certain E.U. financial institutions, including GSBE. The NSFR requirement implemented in the U.K. is applicable to both GSI and GSIB.

The FRB’s enhanced prudential standards require BHCs with $100 billion or more in total consolidated assets to comply with enhanced liquidity and overall risk management standards, which include maintaining a level of highly liquid assets based on projected funding needs for 30 days, and increased involvement by boards of directors in liquidity and overall risk management. Although the liquidity requirement under these rules has some similarities to the LCR, it is a separate requirement. GSBE also has its own liquidity planning process, which incorporates internally designed stress tests and those required under German regulatory requirements and the ECB Guide to Internal Liquidity Adequacy Assessment Process (ILAAP). GSI and GSIB have their own liquidity planning processes, which incorporate internally designed stress tests developed in accordance with the guidelines of the PRA’s ILAAP.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Overview and Structure of Risk Management” and “— Liquidity Risk Management — Liquidity Regulatory Framework” in Part II, Item 7 of this Form 10-K for information about the LCR and NSFR, as well as its risk management practices and liquidity.

Stress Tests and Capital Planning. The FRB’s Comprehensive Capital Analysis and Review (CCAR) is designed to ensure that large BHCs, including us, have sufficient capital to permit continued operations during times of economic and financial stress. As required by the FRB, Goldman Sachs perform an annual capital stress test and incorporate the results into an annual capital plan, which Goldman Sachs submit to the FRB for review. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital — Capital Planning and Stress Testing Process” in Part II, Item 7 of this Form 10-K for further information about its annual capital plan. As described in “Available Information” below, summary results of the annual stress test are published on its website.

As part of the CCAR process, the FRB evaluates its plan to make capital distributions across a range of macroeconomic and company-specific assumptions, based on its and the FRB’s own stress tests.

The FRB’s rule applicable to BHCs with $100 billion or more in total consolidated assets, including us, replaced the static 2.5% component of the capital conservation buffer required under the Standardized Capital Rules with the SCB. The SCB reflects stressed losses estimated under the supervisory severely adverse scenario of the CCAR stress tests, as calculated by the FRB, and includes fits quarters of planned common stock dividends. The SCB, which is subject to a 2.5% floor, is generally effective on October 1 of each year and remains in effect until October 1 of the following year, unless it is reset in connection with the resubmission of a capital plan. See “Available Information” below and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital” in Part II, Item 7 of this Form 10‑K for information about its SCB requirement.

The SCB rule requires a BHC to receive the FRB’s approval for any dividend, stock repurchase or other capital distribution, other than a capital distribution on a newly issued capital instrument, if the BHC is required to resubmit its capital plan, which may occur if the BHC determines there has been or will be a “material change” in its risk profile, financial condition or corporate structure since the plan was last submitted, or if the FRB directs the BHC to revise and resubmit its capital plan.

U.S. depository institutions with total consolidated assets of $250 billion or more that are subsidiaries of U.S. G-SIBs, such as GS Bank USA, are required to submit annual company-run stress test results to the FRB. GSBE also has its own capital and stress testing process, which incorporates internally designed stress tests and those required under German regulatory requirements and the ECB Guide to Internal Capital Adequacy Assessment Process (ICAAP). In addition, GSI and GSIB have their own capital planning and stress testing processes, which incorporate internally designed stress tests developed in accordance with the PRA’s ICAAP guidelines.

Limitations on the Payment of Dividends. U.S. federal and state laws impose limitations on the payment of dividends by U.S. depository institutions, such as GS Bank USA. In general, the amount of dividends that may be paid by GS Bank USA is limited to the lesser of the amounts calculated under a recent earnings test and an undivided profits test. Under the recent earnings test, a dividend may not be paid if the total of all dividends declared by the entity in any calendar year is in excess of the current year’s net income combined with the retained net income of the two preceding years, unless the entity obtains regulatory approval. Under the undivided profits test, a dividend may not be paid in excess of the entity’s undivided profits (generally, accumulated net profits that have not been paid out as dividends or transferred to surplus), unless the entity receives regulatory and stockholder approval. As a result of dividend payments from GS Bank USA to Group Inc. in connection with the acquisition of GSBE in July 2021, GS Bank USA cannot currently declare any dividends without regulatory approval.

The applicable U.S. banking regulators have authority to prohibit or limit the payment of dividends if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization.

Source of Strength. The Dodd-Frank Act requires BHCs to act as a source of strength to their U.S. bank subsidiaries and to commit capital and financial resources to support those subsidiaries. This support may be required by the FRB at times when BHCs might otherwise determine not to provide it. Capital loans by a BHC to a U.S. subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In addition, if a BHC commits to a U.S. federal banking agency that it will maintain the capital of its bank subsidiary, whether in response to the FRB’s invoking its source-of-strength authority or in response to other regulatory measures, that commitment will be assumed by the bankruptcy trustee for the BHC and the bank will be entitled to priority payment in respect of that commitment, ahead of other creditors of the BHC.

Transactions Between Affiliates. Transactions between GS Bank USA or its subsidiaries, including GSBE, and Group Inc. or its other subsidiaries and affiliates are subject to restrictions under the Federal Reserve Act and regulations issued by the FRB. These laws and regulations generally limit the types and amounts of transactions (such as loans and other credit extensions, including credit exposure arising from resale agreements, securities borrowing and derivative transactions, from GS Bank USA or its subsidiaries to Group Inc. or its other subsidiaries and affiliates and purchases of assets by GS Bank USA or its subsidiaries from Group Inc. or its other subsidiaries and affiliates) that may take place and generally require those transactions, to the extent permitted, to be on market terms or better to GS Bank USA or its subsidiaries. These laws and regulations generally do not apply to transactions between GS Bank USA and its subsidiaries. Similarly, German regulatory requirements provide that certain transactions between GSBE and GS Bank USA or its other affiliates, including Group Inc., must be on market terms and are subject to special internal approval requirements. PRA rules provide similar requirements for transactions between GSI and GSIB and their respective affiliates.

Resolution and Recovery Plans. Goldman Sachs are required by the FRB and the FDIC to submit a periodic plan for its rapid and orderly resolution in the event of material financial distress or failure (resolution plan). If these regulators jointly determine that an institution has failed to remediate identified shortcomings in its resolution plan or that its resolution plan, after any permitted resubmission, is not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, they may jointly impose more stringent capital, leverage or liquidity requirements or restrictions on growth, activities or operations, or may jointly order the institution to divest assets or operations, in order to facilitate orderly resolution in the event of failure. The FRB and FDIC require U.S. G-SIBs to submit resolution plans every two years (alternating between submissions of full plans and targeted plans that include only select information). Goldman Sachs submitted its 2021 resolution plan, which was a targeted submission, in June 2021, and the FRB and FDIC did not identify any deficiencies or shortcomings. Its next required submission is a full submission by July 1, 2023. See “Risk Factors — Legal and Regulatory —The application of Group Inc.’s proposed resolution strategy could result in greater losses for Group Inc.’s security holders” in Part I, Item 1A of this Form 10-K and “Available Information” in Part I, Item 1 of this Form 10-K for further information about its resolution plan.

Goldman Sachs are also required by the FRB to submit, on a periodic basis, a global recovery plan that outlines the steps that Goldman Sachs could take to reduce risk, maintain sufficient liquidity and conserve capital in times of prolonged stress. Certain of its subsidiaries are also subject to similar recovery plan requirements.

GS Bank USA is required to provide a resolution plan to the FDIC that must, among other things, demonstrate that it is adequately protected from risks arising from its other entities. GS Bank USA’s most recent resolution plan was submitted in June 2018. In June 2021, the FDIC provided guidance on insured depository institution (IDI) resolution plans and divided IDIs with $100 billion or more in assets, including GS Bank USA, into two groups for purposes of the timing of resolution plan submissions. GS Bank USA is in the second group with a later submission date.

The U.S. federal bank regulatory agencies have adopted rules imposing restrictions on qualified financial contracts (QFCs) entered into by G-SIBs. The rules are intended to facilitate the orderly resolution of a failed G-SIB by limiting the ability of the G-SIB to enter into a QFC unless (i) the counterparty waives certain default rights in such contract arising upon the entry of the G‑SIB or one of its affiliates into resolution, (ii) the contract does not contain enumerated prohibitions on the transfer of such contract and/or any related credit enhancement, and (iii) the counterparty agrees that the contract will be subject to the special resolution regimes set forth in the Dodd-Frank Act orderly liquidation authority (OLA) and the Federal Deposit Insurance Act of 1950 (FDIA), described below. GS Bank USA has achieved compliance by adhering to the International Swaps and Derivatives Association Universal Resolution Stay Protocol (ISDA Universal Protocol) and International Swaps and Derivatives Association 2018 U.S. Resolution Stay Protocol (U.S. ISDA Protocol) described below.

Certain of its other subsidiaries also adhere to these protocols. The ISDA Universal Protocol imposes a stay on certain cross-default and early termination rights within standard ISDA derivative contracts and securities financing transactions between adhering parties in the event that one of them is subject to resolution in its home jurisdiction, including a resolution under OLA or the FDIA in the U.S. The U.S. ISDA Protocol, which was based on the ISDA Universal Protocol, was created to allow market participants to comply with the final QFC rules adopted by the federal bank regulatory agencies.

The E.U. Bank Recovery and Resolution Directive (BRRD), as amended by the BRRD II, establishes a framework for the recovery and resolution of financial institutions in the E.U., such as GSBE. The BRRD provides national supervisory authorities with tools and powers to pre-emptively address potential financial crises in order to promote financial stability and minimize taxpayers’ exposure to losses. The BRRD requires E.U. member states to grant certain resolution powers to national and, where relevant, E.U. resolution authorities, including the power to impose a temporary stay and to recapitalize a failing entity by writing down its unsecured debt or converting its unsecured debt into equity. Financial institutions in the E.U. must provide that contracts governed by non-E.U. law recognize those temporary stay and bail-in powers unless doing so would be impracticable. GSBE is under the direct authority of the Single Resolution Board for resolution planning. Regulatory authorities in the E.U. may require financial institutions in the E.U., including subsidiaries of non-E.U. groups, to submit recovery plans and to assist the relevant resolution authority in constructing resolution plans for the E.U. entities. GSBE’s primary regulator with respect to recovery planning is the ECB, and it is also regulated by BaFin and Deutsche Bundesbank.

The U.K. Special Resolution Regime confers substantially the same powers on the Bank of England, as the U.K. resolution authority, and substantially the same requirements on U.K. financial institutions. Further, certain U.K. financial institutions, including GSI and GSIB, are required to meet the Bank of England’s expectations contained in the U.K. Resolution Assessment Framework, including with respect to loss absorbency, contractual stays, operational continuity and funding in resolution. They are also required by the PRA to submit solvent wind-down plans on how they could be wound down in a stressed environment. The PRA is also the regulatory authority in the U.K. that supervises recovery planning, and GSI and GSIB are each required to submit recovery plans to the PRA.

Total Loss-Absorbing Capacity (TLAC). The FRB's rule addresses U.S. implementation of the Financial Stability Board’s (FSB’s) TLAC principles and term sheet on minimum TLAC requirements for G-SIBs. The rule, among other things, establishes minimum TLAC requirements, establishes minimum requirements for “eligible long-term debt” (i.e., debt that is unsecured, has a maturity of at least one year from issuance and satisfies certain additional criteria) and caps the amount of parent company liabilities that are not eligible long-term debt.

The rule also prohibits a BHC that has been designated as a U.S. G-SIB from (i) guaranteeing subsidiaries’ liabilities that are subject to early termination provisions if the BHC enters into an insolvency or receivership proceeding, subject to an exception for guarantees permitted by rules of the U.S. federal banking agencies imposing restrictions on QFCs; (ii) incurring liabilities guaranteed by subsidiaries; (iii) issuing short-term debt to third parties; or (iv) entering into derivatives and certain other financial contracts with external counterparties.

Additionally, the rule caps, at 5% of the value of the parent company’s eligible TLAC, the amount of unsecured non-contingent third-party liabilities that are not eligible long-term debt that could rank equally with or junior to eligible long-term debt.

The CRR, the BRRD and U.K. financial services regime are designed to, among other things, implement the FSB’s minimum TLAC requirement for G-SIBs. For example, the CRR requires E.U. subsidiaries of a non-E.U. G-SIB that exceed the threshold of 5% of the G-SIB’s RWAs, operating income or leverage exposure, such as GSBE, to meet internal TLAC requirements. Under the U.K. financial services regime, GSG UK exceeds the applicable thresholds and therefore, it is subject to internal TLAC requirements.

The CRD requires a non-E.U. group with more than €40 billion of assets in the E.U., such as us, to establish an E.U. intermediate holding company (E.U. IHC) by December 30, 2023 if it has, as in its case, two or more of certain types of E.U. financial institution subsidiaries, including broker-dealers and banks. A non-E.U. group may have two E.U. IHCs if a request for a second is approved. GSBE and GSPIC will be subject to the single E.U. IHC requirement unless an exemption is granted. The CRR requires E.U. IHCs to satisfy capital and liquidity requirements, a minimum requirement for own funds and eligible liabilities (MREL), and certain other prudential requirements at a consolidated level. The U.K. has not implemented a similar requirement to establish an IHC; however, the PRA has introduced a requirement that certain U.K. financial holding companies or a designated U.K. group entity be responsible for the U.K. group’s regulatory compliance. Goldman Sachs have designated GSI for that responsibility.

The BRRD II and the U.K. resolution regime subject institutions to an MREL, which is generally consistent with the FSB’s TLAC standard. GSI is required to maintain a minimum level of internal MREL and provide the Bank of England the right to exercise bail-in triggers over certain intercompany regulatory capital and senior debt instruments issued by GSI. These triggers enable the Bank of England to write down such instruments or convert such instruments to equity. The triggers can be exercised by the Bank of England if it determines that GSI has reached the point of non-viability and the FRB and the FDIC have not objected to the bail-in or if Group Inc. enters bankruptcy or similar proceedings. The Single Resolution Board’s internal MREL requirements applicable to GSBE are required to be phased in through January 2024.

Insolvency of a BHC or IDI. The Dodd-Frank Act created a resolution regime, OLA, for BHCs and their affiliates that are systemically important. Under OLA, the FDIC may be appointed as receiver for the systemically important institution and its failed non-bank subsidiaries if, upon the recommendation of applicable regulators, the U.S. Secretary of the Treasury determines, among other things, that the institution is in default or in danger of default, that the institution’s failure would have serious adverse effects on the U.S. financial system and that resolution under OLA would avoid or mitigate those effects.

If the FDIC is appointed as receiver under OLA, then the powers of the receiver, and the rights and obligations of creditors and other parties who have dealt with the institution, would be determined under OLA, and not under the bankruptcy or insolvency law that would otherwise apply. The powers of the receiver under OLA are generally based on the powers of the FDIC as receiver for depository institutions under the FDIA, described below.

Substantial differences in the rights of creditors exist between OLA and the U.S. Bankruptcy Code, including the right of the FDIC under OLA to disregard the strict priority of creditor claims in some circumstances, the use of an administrative claims procedure to determine creditors’ claims (as opposed to the judicial procedure utilized in bankruptcy proceedings), and the right of the FDIC to transfer claims to a “bridge” entity. In addition, OLA limits the ability of creditors to enforce certain contractual cross-defaults against affiliates of the institution in receivership. The FDIC has issued a notice that it would likely resolve a failed FHC by transferring its assets to a “bridge” holding company under its “single point of entry” or “SPOE” strategy pursuant to OLA.

Under the FDIA, if the FDIC is appointed as conservator or receiver for an IDI such as GS Bank USA, upon its insolvency or in certain other events, the FDIC has broad powers, including the power:

• To transfer any of the IDI’s assets and liabilities to a new obligor, including a newly formed “bridge” bank, without the approval of the depository institution’s creditors;

• To enforce the IDI’s contracts pursuant to their terms without regard to any provisions triggered by the appointment of the FDIC in that capacity; or

• To repudiate or disaffirm any contract or lease to which the IDI is a party, the performance of which is determined by the FDIC to be burdensome and the repudiation or disaffirmance of which is determined by the FDIC to promote the orderly administration of the IDI.

In addition, the claims of holders of domestic deposit liabilities and certain claims for administrative expenses against an IDI would be afforded a priority over other general unsecured claims, including deposits at non-U.S. branches and claims of debtholders of the IDI, in the “liquidation or other resolution” of such an institution by any receiver. As a result, whether or not the FDIC ever sought to repudiate any debt obligations of GS Bank USA, the debtholders (other than depositors at U.S. branches) would be treated differently from, and could receive, if anything, substantially less than, the depositors at U.S. branches of GS Bank USA.

Deposit Insurance. Deposits at GS Bank USA have the benefit of FDIC insurance up to the applicable limits. The FDIC’s Deposit Insurance Fund is funded by assessments on IDIs. GS Bank USA’s assessment (subject to adjustment by the FDIC) is currently based on its average total consolidated assets less its average tangible equity during the assessment period, its supervisory ratings and specified forward-looking financial measures used to calculate the assessment rate. The deposits of GSBE are covered by the German statutory deposit protection program to the extent provided by law. In addition, GSBE has elected to participate in the German voluntary deposit protection program which provides insurance for certain eligible deposits not covered by the German statutory deposit program. Eligible deposits at GSIB and the London branch of GS Bank USA are covered by the U.K. Financial Services Compensation Scheme up to the applicable limits.

In October 2022, the FDIC adopted a rule applicable to all FDIC-insured banks that increased initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023.

Prompt Corrective Action. The U.S. Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) requires the U.S. federal bank regulatory agencies to take “prompt corrective action” in respect of depository institutions that do not meet specified capital requirements. FDICIA establishes five capital categories for FDIC-insured banks, such as GS Bank USA: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

An institution may be downgraded to, or deemed to be in, a capital category that is lower than is indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, as the capital category of an institution declines. Failure to meet the capital requirements could also require a depository institution to raise capital. Ultimately, critically undercapitalized institutions are subject to the appointment of a receiver or conservator, as described in “Insolvency of an IDI or a BHC” above.

The prompt corrective action regulations do not apply to BHCs. However, the FRB is authorized to take appropriate action at the BHC level, based upon the undercapitalized status of the BHC’s depository institution subsidiaries. In certain instances, relating to an undercapitalized depository institution subsidiary, the BHC would be required to guarantee the performance of the undercapitalized subsidiary’s capital restoration plan and might be liable for civil money damages for failure to fulfill its commitments on that guarantee. Furthermore, in the event of the bankruptcy of the BHC, the guarantee would take priority over the BHC’s general unsecured creditors, as described in “Source of Strength” above.

Volcker Rule and Other Restrictions on Activities. As a BHC, Goldman Sachs are subject to limitations on the types of business activities in which Goldman Sachs may engage.

Volcker Rule. The Volcker Rule prohibits “proprietary trading,” but permits activities such as underwriting, market making and risk-mitigation hedging, requires an extensive compliance program and includes additional reporting and record-keeping requirements.

In addition, the Volcker Rule limits the sponsorship of, and investment in, “covered funds” (as defined in the rule) by banking entities, including us. It also limits certain types of transactions between us and its sponsored and advised funds, similar to the limitations on transactions between depository institutions and their affiliates. Covered funds include its private equity funds, certain of its credit and real estate funds, its hedge funds and certain other investment structures. The limitation on investments in covered funds requires us to limit its investment in each such fund to 3% or less of the fund’s net asset value, and to limit its aggregate investment in all such funds to 3% or less of its Tier 1 capital.

The FRB has granted its request for additional time until July 2023 to conform its investments in, and relationships with, certain legacy “illiquid funds” (as defined in the Volcker Rule) that were in place prior to December 2013. See Note 8 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for further information about its investments in such funds.

Other Restrictions. FHCs generally can engage in a broader range of financial and related activities than are otherwise permissible for BHCs as long as they continue to meet the eligibility requirements for FHCs. The broader range of permissible activities for FHCs includes underwriting, dealing and making markets in securities and making investments in non-FHCs (merchant banking activities). In addition, certain FHCs, including us, are permitted to engage in certain commodities activities in the U.S. that may otherwise be impermissible for BHCs, so long as the assets held pursuant to these activities do not equal 5% or more of their consolidated assets.

The FRB, however, has the authority to limit an FHC’s ability to conduct activities that would otherwise be permissible, and will likely do so if the FHC does not satisfactorily meet certain requirements of the FRB. For example, if an FHC or any of its U.S. depository institution subsidiaries ceases to maintain its status as well-capitalized or well-managed, the FRB may impose corrective capital and/or managerial requirements, as well as additional limitations or conditions. If the deficiencies persist, the FHC may be required to divest its U.S. depository institution subsidiaries or to cease engaging in activities other than the business of banking and certain closely related activities.

If any IDI subsidiary of an FHC fails to maintain at least a “satisfactory” rating under the Community Reinvestment Act (CRA), the FHC would be subject to restrictions on certain new activities and acquisitions.

In addition, Goldman Sachs are required to obtain prior FRB approval before certain acquisitions and before engaging in certain banking and other financial activities both within and outside the U.S.

U.S. G-SIBs, like us, are also required to comply with a rule regarding single counterparty credit limits, which imposes more stringent requirements for credit exposures among major financial institutions.

The New York State banking law imposes lending limits (which take into account credit exposure from derivative transactions) and other requirements that could impact the manner and scope of GS Bank USA’s activities.

The U.S. federal bank regulatory agencies have issued guidance that focuses on transaction structures and risk management frameworks and that outlines high-level principles for safe-and-sound leveraged lending, including underwriting standards, valuation and stress testing. This guidance has, among other things, limited the percentage amount of debt that can be included in certain transactions.

As a German credit institution, GSBE will become subject to Volcker Rule-type prohibitions under German banking law and regulations on December 31, 2023 because its financial assets exceeded certain thresholds. Prohibited activities include (i) proprietary trading, (ii) high-frequency trading at a German trading venue, and (iii) lending and guarantee businesses with German hedge funds, German funds of hedge funds or any non-German substantially leveraged alternative investment funds, unless an exclusion or an exemption applies. See “Volcker Rule” above for further information.

U.K. banks that have over £25 billion of core retail deposits are required to separate their retail banking services from their investment and international banking activities, commonly known as “ring-fencing.” GSIB is not currently subject to the ring-fencing requirement.

Broker-Dealer and Securities Regulation

Its broker-dealer subsidiaries, including GS&Co., are subject to regulations that cover all aspects of the securities business, including sales methods, trade practices, the use and safekeeping of clients’ funds and securities, capital structure, record-keeping, the financing of clients’ purchases, and the conduct of directors, officers and employees. In the U.S., the SEC is the federal agency responsible for the administration of the federal securities laws.

U.S. state securities and other U.S. regulators also have regulatory or oversight authority over GS&Co. For a description of net capital requirements applicable to GS&Co., see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Management and Regulatory Capital — U.S. Regulated Broker-Dealer Subsidiaries” in Part II, Item 7 of this Form 10-K.

The SEC issued a proposed rule in November 2021 which, if adopted, would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association, such as FINRA.

The SEC requires broker-dealers to act in the best interest of their customers. SEC rules require broker-dealers to provide a standardized, short-form disclosure highlighting services offered, applicable standards of conduct, fees and costs, the differences between brokerage and advisory services, and any conflicts of interest. In addition, several states have adopted or proposed adopting uniform fiduciary duty standards applicable to broker-dealers.

In December 2022, the SEC issued fits proposals to reform the U.S. equity market structure. The SEC proposed establishing a broker-dealer best execution standard, which would require broker-dealers to use reasonable diligence to ascertain the best market for a customer order so that the resultant price to the customer is as favorable as possible under prevailing market conditions. The best execution standard applies to all securities and supplements, but does not replace, the existing FINRA and Municipal Securities Rulemaking Board (MSRB) best execution rules. The SEC also proposed, among other things, to require that individual investor orders routed through broker-dealers be exposed to order-by-order competition in qualified auctions; to update the minimum pricing increments, with variable price increments based on the trading characteristics of stocks; and to revise and expand reporting and disclosure requirements relating to execution quality.

In January 2023, the SEC proposed a rule that would prohibit participants involved in the creation of asset-backed securities, including any underwriter, placement agent, initial purchaser or sponsor of an asset-backed security (or any affiliate or subsidiary), from engaging in any transaction that would involve or result in a material conflict of interest between the securitization participant and an investor in an asset-backed security, including reducing its exposure to the asset-backed securities, subject to certain exceptions.

The SEC, FINRA and regulators in various non-U.S. jurisdictions have imposed both conduct-based and disclosure-based requirements with respect to research reports and research analysts and may impose additional regulations.

GS&Co. and other U.S. subsidiaries are also subject to rules adopted by U.S. federal agencies pursuant to the Dodd-Frank Act that require any person who organizes or initiates certain asset-backed securities transactions to retain a portion (generally, at least five percent) of any credit risk that the person conveys to a third party. For certain securitization transactions, retention by third-party purchasers may satisfy this requirement.

In Europe, Goldman Sachs provide broker-dealer services, including through GSBE, GSPIC and GSI, that are subject to oversight by European and national regulators. These services are regulated in accordance with E.U., U.K. and other national laws and regulations. These laws require, among other things, compliance with certain capital adequacy and liquidity standards, customer protection requirements and market conduct and trade reporting rules. Certain of its European subsidiaries are also regulated by the securities, derivatives and commodities exchanges of which they are members.

In the E.U. and the U.K., the European Markets in Financial Instruments Directive (MiFID II) established trading venue categories for the purposes of discharging the obligation to trade OTC derivatives on a trading platform, enhanced pre- and post-trade transparency covering a wide range of financial instruments, placed volume caps on non-transparent liquidity trading for equities trading venues, limited the use of broker-dealer equities crossing networks and created a regime for systematic internalizers, which are investment firms that execute client equity transactions outside a trading venue. Additional control requirements apply to algorithmic trading, high frequency trading and direct electronic access. Commodities trading firms are required to calculate their positions and adhere to specific position limits. MiFID II also requires enhanced transaction reporting, the publication of best execution data by investment firms and trading venues, transparency on costs and charges of service to investors, restrictions on the way investment managers can pay for the receipt of investment research, rules limiting the payment and receipt of soft commissions and other forms of inducements, and mandatory unbundling for broker-dealers between execution and other major services. Certain of its non-U.S. subsidiaries, including GSBE and GSI, are subject to risk retention requirements in connection with securitization activities.

GSJCL, its regulated Japanese broker-dealer, is subject to capital requirements imposed by Japan’s Financial Services Agency. GSJCL is also regulated by the Tokyo Stock Exchange, the Bank of Japan and the Ministry of Finance, among others.

The Securities and Futures Commission in Hong Kong, the China Securities Regulatory Commission, the Reserve Bank of India, the Securities and Exchange Board of India, the Australian Securities and Investments Commission, the Australian Securities Exchange, the Monetary Authority of Singapore, the Korean Financial Supervisory Service and the Central Bank of Brazil, among others, regulate various of its subsidiaries and also have capital standards and other requirements comparable to the rules of the U.S. regulators.

Its exchange-based market-making activities are subject to extensive regulation by a number of securities exchanges. As a market maker on exchanges, Goldman Sachs are required to maintain orderly markets in the securities to which Goldman Sachs are assigned.

Swaps, Derivatives and Commodities Regulation

The commodity futures, commodity options and swaps industry in the U.S. is subject to regulation under the U.S. Commodity Exchange Act (CEA). The CFTC is the U.S. federal agency charged with the administration of the CEA. In addition, the SEC is the U.S. federal agency charged with the regulation of security-based swaps. The rules and regulations of various self-regulatory organizations, such as the Chicago Mercantile Exchange, other futures exchanges and the National Futures Association, also govern commodity futures, commodity options and swaps activities.

The terms “swaps” and “security-based swaps” include a wide variety of derivative instruments in addition to those conventionally referred to as swaps (including certain forward contracts and options), and relate to a wide variety of underlying assets or obligations, including currencies, commodities, interest or other monetary rates, yields, indices, securities, credit events, loans and other financial obligations.

CFTC rules require registration of swap dealers, mandatory clearing and execution of interest rate and credit default swaps and real-time public reporting and adherence to business conduct standards for all in-scope swaps. A number of these requirements, particularly those regarding recordkeeping and reporting, also apply to transactions that do not involve a registered swap dealer. GS&Co. and other subsidiaries, including GS Bank USA, GSBE, GSI and J. Aron, are registered with the CFTC as swap dealers. The CFTC has rules establishing capital requirements for swap dealers that are not subject to the capital rules of a prudential regulator, such as the FRB. The CFTC also has financial reporting requirements for covered swap entities and capital rules for CFTC-registered futures commission merchants that provide explicit capital requirements for proprietary positions in swaps and security-based swaps that are not cleared by a clearing organization. Certain of its registered swap dealers, including J. Aron, are subject to the CFTC’s capital requirements.

Its affiliates registered as swap dealers are subject to the margin rules issued by the CFTC (in the case of its non-bank swap dealers) and the FRB (in the case of GS Bank USA and GSBE). Inter-affiliate transactions under the CFTC and FRB margin rules are generally exempt from initial margin requirements.

SEC rules govern the registration and regulation of security-based swap dealers. Security-based swaps are defined as swaps on single securities, single loans or narrow-based baskets or indices of securities. The SEC has adopted a number of rules for security-based swap dealers, including (i) capital, margin and segregation requirements; (ii) record-keeping, financial reporting and notification requirements; (iii) business conduct standards; (iv) regulatory and public trade reporting; and (v) the application of risk mitigation techniques to uncleared portfolios of security-based swaps. Certain of its subsidiaries, including GS&Co., GS Bank USA and GSBE, are registered with the SEC as security-based swap dealers and subject to the SEC’s regulations regarding security-based swaps. The SEC has proposed additional regulations regarding security-based swaps that would, among other things, require public reporting of large positions in security-based swaps.

GS Bank USA is also subject to the FRB’s swaps margin rules. These rules require the exchange of initial and variation margin in connection with transactions in swaps and security-based swaps that are not cleared through a registered or exempt clearinghouse. GS Bank USA is required to post and collect margin in connection with transactions with swap dealers, security-based swap dealers, major swap participants and major security-based swap participants, or financial end users.

The CFTC and the SEC have adopted rules relating to cross-border regulation of swaps and securities-based swaps, and business conduct and registration requirements. The CFTC and the SEC have entered into agreements with certain non-U.S. regulators regarding the cross-border regulation of derivatives and the mutual recognition of cross-border execution facilities and clearinghouses, and have approved substituted compliance with certain non-U.S. regulations related to certain business conduct requirements and margin rules. The U.S. prudential regulators have not yet made a determination with respect to substituted compliance for transactions subject to non-U.S. margin rules.

Similar types of regulation have been proposed or adopted in jurisdictions outside the U.S., including in the E.U. and Japan. Under the European Market Infrastructure Regulation (EMIR), for example, the E.U. and the U.K. have established regulatory requirements relating to portfolio reconciliation and reporting, clearing certain OTC derivatives and margining for uncleared derivatives activities. In addition, under the European Markets in Financial Instruments Directive and Regulation, transactions in certain types of derivatives are required to be executed on regulated platforms or exchanges.

The CFTC has adopted rules that limit the size of positions in physical commodity derivatives that can be held by any entity, or any group of affiliates or other parties trading under common ownership or control. The CFTC position limits apply to futures on physical commodities and options on such futures, apply to both physically and cash settled positions and to swaps that are economically equivalent to such futures and options. The position limit rules initially impose limits in the spot month only (i.e., during the delivery period for the physical commodities, which is typically a period of several days). CFTC spot and non-spot month limits will continue to apply to futures on certain legacy agricultural commodities, and it is possible that non-spot month limits will at some point be adopted for futures, options on futures and swaps on other categories of physical commodities.

J. Aron is authorized by the U.S. Federal Energy Regulatory Commission (FERC) to sell wholesale physical power at market-based rates. As a FERC-authorized power marketer, J. Aron is subject to regulation under the U.S. Federal Power Act and FERC regulations and to the oversight of FERC. As a result of its investing activities, Group Inc. is also an “exempt holding company” under the U.S. Public Utility Holding Company Act of 2005 and applicable FERC rules.

In addition, as a result of its power-related and commodities activities, Goldman Sachs are subject to energy, environmental and other governmental laws and regulations, as described in “Risk Factors — Legal and Regulatory — Its commodities activities, particularly its physical commodities activities, subject us to extensive regulation and involve certain potential risks, including environmental, reputational and other risks that may expose us to significant liabilities and costs” in Part I, Item 1A of this Form 10-K.

GS&Co. is registered with the CFTC as a futures commission merchant, and several of its subsidiaries, including GS&Co., are registered with the CFTC and act as commodity pool operators and commodity trading advisors. Goldman Sachs Financial Markets, L.P. is registered with the SEC as an OTC derivatives dealer.

Asset Management and Wealth Management Regulation

Its asset management and wealth management businesses are subject to extensive oversight by regulators around the world relating to, among other things, the fair treatment of clients, safeguarding of client assets, offerings of funds, marketing activities, transactions among affiliates and its management of client funds.

The federal securities laws impose fiduciary duties on investment advisers, including GS&Co., Goldman Sachs Asset Management, L.P. and its other U.S. registered investment adviser subsidiaries. Additionally, SEC rules require investment advisers to provide a standardized, short-form disclosure highlighting services offered, applicable standards of conduct, fees and costs, the differences between brokerage and advisory services, and any conflicts of interest. Several states have adopted or proposed adopting uniform fiduciary duty standards applicable to advisers.

Certain of its European subsidiaries, including GSBE in the E.U. and GSAMI in the U.K., are subject to MiFID II and/or related regulations (including the U.K. legislation making such regulations part of U.K. law), which govern the approval, organizational, marketing and reporting requirements of E.U. or U.K.-based investment managers and the ability of investment fund managers located outside the E.U. or the U.K. to access those markets. NNIP B.V. is subject to similar requirements as a management company licensed under the E.U. Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the E.U. Alternative Investment Fund Managers (AIFM) Directive with additional authorizations for certain activities regulated under MiFID II. Its asset management business in the E.U. and the U.K. significantly depends on its ability to delegate parts of its activities to other affiliates.

GSAMI is also subject to the prudential regime for U.K. investment firms, the Investment Firms Prudential Regime (IFPR), which governs the prudential requirements for U.K. investment firms prudentially regulated by the FCA.

Consumer Regulation

Its U.S. consumer-oriented activities are subject to supervision and regulation by the CFPB with respect to federal consumer protection laws, including laws relating to fair lending and the prohibition of unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products and services. Its consumer-oriented activities are also subject to various state and local consumer protection laws, rules and regulations, which, among other things, impose obligations relating to marketing, origination, servicing and collections activities in its consumer businesses. Many of these laws, rules and regulations also apply to its small business lending activities, which are also subject to supervision and regulation by federal and state regulators. In addition, its U.K. consumer deposit-taking activities are subject to U.K. consumer protection laws and regulations.

Compensation Practices

Its compensation practices are subject to oversight by the FRB and, with respect to some of its subsidiaries and employees, by other regulatory bodies worldwide.

The FSB has released standards for implementation by local regulators that are designed to encourage sound compensation practices at banks and other financial companies. The U.S. federal bank regulatory agencies have also provided guidance designed to ensure that incentive compensation arrangements at banking organizations take into account risk and are consistent with safe and sound practices. The guidance sets forth the following three key principles with respect to incentive compensation arrangements: (i) the arrangements should provide employees with incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk; (ii) the arrangements should be compatible with effective controls and risk management; and (iii) the arrangements should be supported by strong corporate governance. The guidance provides that supervisory findings with respect to incentive compensation will be incorporated, as appropriate, into the organization’s supervisory ratings, which can affect its ability to make acquisitions or perform other actions. The guidance also notes that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk management, control or governance processes pose a risk to the organization’s safety and soundness.

The Dodd-Frank Act requires U.S. financial regulators, including the FRB and SEC, to adopt rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets. The U.S. financial regulators proposed revised rules in 2016, which have not been finalized. In October 2022, the SEC adopted a final rule requiring securities exchanges to adopt rules mandating, in the case of a restatement, the recovery or “clawback” of excess incentive-based compensation paid to current or former executive officers and requiring listed issuers to disclose any recovery analysis where recovery is triggered by a restatement.

The NYDFS’ guidance emphasizes that any incentive compensation arrangements tied to employee performance indicators at banking institutions regulated by the NYDFS, including GS Bank USA, must be subject to effective risk management, oversight and control.

In the E.U., certain provisions in the CRR and CRD are designed to meet the FSB’s compensation standards. These provisions limit the ratio of variable to fixed compensation of all employees at GSBE and of certain employees at its other operating subsidiaries in the E.U., including those employees identified as having a material impact on the risk profile of regulated entities. CRR II and CRD V amended certain aspects of these rules, including, by increasing minimum variable compensation deferral periods. Substantially similar requirements apply in the U.K. in relation to GSI and GSIB.

The E.U. and the U.K. have each also introduced investment firm regimes, including rules regulating compensation for certain persons providing services to certain investment funds.

Anti-Money Laundering and Anti-Bribery Rules and Regulations

The U.S. Bank Secrecy Act, as amended (BSA), including by the USA PATRIOT Act of 2001, contains anti-money laundering and financial transparency laws and authorizes or mandates the promulgation of various regulations applicable to financial institutions, including standards for verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities. Through these and other provisions, the BSA seeks, among other things, to promote the identification of parties that may be involved in terrorism, money laundering or other suspicious activities.

The Anti-Money Laundering Act of 2020 (AMLA), which amends the BSA, is intended to comprehensively reform and modernize U.S. anti-money laundering laws. Among other things, the AMLA codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards by the U.S. Department of the Treasury for testing technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including a significant expansion in the available sanctions for certain BSA violations; and expands BSA whistleblower incentives and protections. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury has issued the priorities for anti-money laundering and countering the financing of terrorism policy, as required under the AMLA. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.

Goldman Sachs are subject to other laws and regulations worldwide relating to anti-money laundering and financial transparency, including the E.U. Anti-Money Laundering Directives. In addition, Goldman Sachs are subject to the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act and other laws and regulations worldwide regarding corrupt and illegal payments, or providing anything of value, for the benefit of government officials and others. The scope of the types of payments or other benefits covered by these laws is very broad. These laws and regulations include requirements relating to the identification of clients, monitoring for and reporting suspicious transactions, monitoring direct and indirect payments to politically exposed persons, providing information to regulatory authorities and law enforcement agencies, and sharing information with other financial institutions.

Privacy and Cybersecurity Regulation

Its businesses are subject to numerous laws and regulations relating to the privacy of information regarding clients, employees and others. These include, but are not limited to, the GLB Act, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (CCPA), the E.U.’s General Data Protection Regulation (GDPR), the U.K.’s Data Protection Act 2018, the Japanese Personal Information Protection Act, the Personal Information Protection Law of the People’s Republic of China (PIPL), and the Hong Kong Personal Data (Privacy) Ordinance. Among other things, the CCPA imposes compliance obligations with regard to the collection, use and disclosure of personal information. In addition, several other states and non-U.S. jurisdictions have enacted, or are proposing, privacy and data protection laws similar to the GDPR and the CCPA. Furthermore, the GDPR has heightened its privacy compliance obligations, impacted certain of its businesses’ collection, processing and retention of personal data and imposed strict standards for reporting data breaches. The GDPR also provides for significant penalties for non-compliance. The PIPL limits the legal bases for processing personal information, contains heightened notice and consent requirements for the handling of certain types of personal information and imposes special cross-border data transfer rules under certain circumstances.

Its businesses are also subject to laws and regulations governing cybersecurity and related risks, and which require regulatory disclosures of certain security incidents. The NYDFS also requires financial institutions regulated by the NYDFS, including GS Bank USA, to, among other things, (i) establish and maintain a cybersecurity program designed to ensure the confidentiality, integrity and availability of their information systems; (ii) implement and maintain a written cybersecurity policy setting forth policies and procedures for the protection of their information systems and non-public information; and (iii) designate a Chief Information Security Officer.

In January 2023, the E.U. Digital Operational Resilience Act (DORA) became effective, and will apply from January 2025. DORA requires E.U. financial entities, such as GSBE, to have a comprehensive governance and control framework for the management of information and communications technology (ICT) risk.

In addition, in March 2022, the SEC proposed new rules that would require disclosures about material cybersecurity incidents on Form 8-K and updated disclosures about previously disclosed cybersecurity incidents on Forms 10-Q and 10-K.

Team

Philip R. Berlinski, 46

Mr. Berlinski has been Global Treasurer since October 2021; he also serves as Chief Executive Officer of Goldman Sachs Bank USA. He had previously served as Chief Operating Officer of Global Equities from May 2019. Prior to that, he was Co-Head of Global Equities Trading and Execution Services from September 2016 to May 2019.

Denis P. Coleman III, 49

Mr. Coleman has been Chief Financial Officer since January 2022. He had previously served as Deputy Chief Financial Officer from September 2021 and, prior to that, Co-Head of the Global Financing Group from June 2018 to September 2021. From 2016 to June 2018, he was Head of the EMEA Financing Group, and from 2009 to 2016 he was Head of EMEA Credit Finance in London.

Sheara J. Fredman, 47

Ms. Fredman has been Controller and Chief Accounting Officer since November 2019. She had previously served as Head of Regulatory Controllers from September 2017 and, prior to that, she had served as Global Product Controller.

Brian J. Lee, 56

Mr. Lee has been Chief Risk Officer since November 2019. He had previously served as Controller and Chief Accounting Officer from March 2017 and, prior to that, he had served as Deputy Controller from 2014.

Ericka T. Leslie, 52

Ms. Leslie has been Chief Administrative Officer since February 2022. She had previously served as Global Head of Operations and Platform Engineering for the Global Markets Division from March 2020, as Global Head of Operations for the Securities Division from January 2019 and as Head of Global Operations for the Commodities business from September 2008.

John F.W. Rogers, 66

Mr. Rogers has been an Executive Vice President since April 2011 and Chief of Staff and Secretary to the Board since December 2001.

Kathryn H. Ruemmler, 51

Ms. Ruemmler has been the Chief Legal Officer, General Counsel and Secretary since March 2021, and was previously Global Head of Regulatory Affairs from April 2020. From June 2014 to April 2020, Ms. Ruemmler was a Litigation Partner at Latham & Watkins LLP, a global law firm, where she was Global Chair of the White Collar Defense and Investigations practice.

David Solomon, 61

Mr. Solomon has been Chairman of the Board since January 2019 and Chief Executive Officer and a director since October 2018. He had previously served as President and Chief or Co-Chief Operating Officer from January 2017 and Co-Head of the Investment Banking Division from July 2006 to December 2016.

John E. Waldron, 53

Mr. Waldron has been President and Chief Operating Officer since October 2018. He had previously served as Co-Head of the Investment Banking Division from December 2014. Prior to that he was Global Head of Investment Banking Services/Client Coverage for the Investment Banking Division and had oversight of the Investment Banking Services Leadership Group, and from 2007 to 2009 was Global Co-Head of the Financial Sponsors Group.

Financials

Historic

Most recent quarter

During the 3 months ended 31st March 2023, net income increased by $1.185 billion to $3.087 billion on revenues of $12.224 billion from $10.593 billion, representing a respective increase of 161% and decrease of 13% compared to the previous quarter. The company ended the quarter with cash of $634.655 billion, representing a decrease of $21.3 billion from the last quarter.

Most recent year

For the fiscal year 2022, Goldman Sachs reported a net income of $11.3 billion. The annual revenue was $47.4 billion, a decrease of 20.2% over the previous year.

Segment operating results

	Year Ended December
$ in millions	2022	2021	2020
Global Banking & Markets
Net revenues	$32,487	$36,734	$30,469
Provision for credit losses	468	(171)	1,216
Operating expenses	17,851	19,542	18,884
Pre-tax earnings	$14,168	$17,363	$10,369
Net earnings to common	$11,458	$13,535	$7,428
Average common equity	$69,951	$60,064	$54,749
Return on average common equity	16.4%	22.5%	13.6%
Asset & Wealth Management
Net revenues	13,376	21,965	13,757
Provision for credit losses	519	(169)	1,395
Operating expenses	11,550	11,406	9,469
Pre-tax earnings	1,307	10,728	2,893
Net earnings to common	979	8,459	2,083
Average common equity	31,762	29,988	24,963
Return on average common equity	3.1%	28.2%	8.3%
Platform Solutions
Net revenues	1,502	640	$334
Provision for credit losses	1,728	697	487
Operating expenses	1,763	990	630
Pre-tax earnings/(loss)	(1,989)	(1,047)	$(783)
Net earnings/(loss) to common	(1,673)	(843)	$(596)
Average common equity	3,574	1,777	$864
Return on average common equity	(46.8)%	(47.4)%	(69.0)%
Total
Net revenues	47,365	59,339	$44,560
Provision for credit losses	2,715	357	3,098
Operating expenses	31,164	31,938	28,983
Pre-tax earnings	13,486	27,044	$12,479
Net earnings to common	10,764	21,151	$8,915
Average common equity	105,287	91,829	$80,576
Return on average common equity	10.2%	23.0%	11.1%

Income statements

	Year Ended December
$ in millions	2022	2021	2020
Interest income	29024	12120	13689
Interest and fees on loans	9059	5319	4883
Interest on bank deposits	3233	(24)	245
Other interest or dividend income	12264	7805	8279
Interest income growth	139.47%	-11.46%	-37.03%
Total interest expense	21346	5650	8938
Interest expense on bank deposits	5823	1303	2386
Other interest expense	12715	4347	5953
Interest expense on debt	6257	3758	4695
Other borrowed funds	6458	3758	4695
Total interest expense growth	277.81%	-36.79%	-48.56%
Net interest income	7678	6470	4751
Net interest income growth	18.67%	36.18%	8.92%
Non interest income	38.237	52201	39747
Securities gain	2518	9979	4363
Trading accounts income	6972	9725	18803
Foreign exchange gains	11662	5627	3257
Trust income, commission & fees	20399	25846	19612
Trust income	9005	8059	6923
Commission & fees income	11394	17787	12689
Other operating income	3492	982	226
Income taxes	2225	5409	3020
Net income	11261	21635	9459
Net income growth	-47.95%	128.72%	11.73%
Net margin	16.74%	-	-
EPS	30.06	59.45	24.74
EPS growth	-49.34%	141.25%	17.71%
EBIT	13486	27044	12479

Risks

As with any investment, investing in Goldman Sachs carries a level of risk. Overall, based on the Goldman Sachs's adjusted beta (i.e. ccc)[13], the degree of risk associated with an investment in Goldman Sachs is 'ccc'.

Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.

Goldman Sachs faces a variety of risks that are substantial and inherent in its businesses. The following is a summary of some of the more important factors that could affect its businesses:

Market

• The company's financial performance and future prospects could be negatively impacted by adverse conditions in the global financial markets and broader economic landscape.
• Exposure to declining asset values, particularly in cases where Goldman Sachs holds net "long" positions, receives fees based on managed asset values, or deals with collateral, may pose risks to the company's business outlook.
• Market volatility changes could influence the company's market-making activities.
• Market uncertainty and lack of investor and CEO confidence resulting from economic downturns and unfavorable economic, geopolitical, or market conditions have already affected, and may continue to affect, the company's investment banking, client intermediation, asset management, and wealth management businesses.
• The company's asset management and wealth management divisions might face challenges if its investment products underperform or clients prefer alternative offerings with lower fees.
• Inflation's negative effects could continue to impact the company's overall business performance, financial results, and fiscal condition.

Liquidity

• The company's liquidity, profitability, and operations could be adversely affected in case it encounters difficulties accessing the debt capital markets or faces challenges in asset sales.
• Business disruptions or lack of liquidity in credit markets, reduced credit access, and higher borrowing costs may impede the company's operations.
• Downgrades in credit ratings or increased credit spreads could have an adverse impact on the company's liquidity and funding costs.
• As a holding company, the company's liquidity relies on payments and loans from its subsidiaries, which are subject to legal, regulatory, and other restrictions on providing funds or assets.

Credit

• Deterioration in the credit quality of third parties or defaults by them may have adverse effects on the company's businesses, profitability, and liquidity.
• Concentration of risk increases the potential for significant losses in the company's market-making, underwriting, investing, and financing activities.
• The company faces credit risk exposure through derivative transactions and potential delays in documentation or settlements, which could lead to unexpected risks and losses.

Operational

• Any failures in operational systems, human errors, malfeasance, or other misconduct may hinder the company's liquidity, disrupt its operations, compromise confidential information, damage its reputation, and cause financial losses.
• Infrastructure failures or disruptions, whether in the company's own systems or those of third parties, could negatively impact liquidity, disrupt operations, harm the company's reputation, and result in financial losses.
• Inadequate protection of computer systems, networks, and client information against cyber attacks and similar threats may impair the company's ability to conduct business, lead to data breaches, damage its reputation, and result in financial losses.
• Ineffectiveness in risk management processes and strategies could expose the company to potential losses.

Legal and Regulatory

• The company's businesses, along with those of its clients, are subject to extensive global regulation.
• Proper identification and management of potential conflicts of interest are crucial to safeguarding the company's business interests.
• Increased governmental and regulatory scrutiny or negative publicity could adversely affect the company's operations.
• Substantial legal or regulatory actions could have severe financial consequences or cause significant reputational damage to the company, thereby affecting its future business prospects.
• Operating globally exposes the company to political, legal, regulatory, and other inherent risks associated with conducting business in multiple countries.
• Implementation of regulatory strategies for resolving large financial institutions might result in increased risk of loss for the company's security holders.

Geopolitical

• The company's business performance, financial condition, liquidity, and results of operations may be susceptible to disruptions in the global economy caused by geopolitical events.
• Notable geopolitical events, such as escalating tensions between the U.S. and China, the Russian-NATO conflict, and Gulf tensions, have the potential to impact the company's operations.

Third Parties

• The company may face challenges if parties, including trading counterparties, customers, and financial intermediaries, fail to fulfill their obligations to Goldman Sachs.
• Close interconnections among financial institutions, based on credit, trading, clearing relationships, etc., can result in liquidity issues, losses, or defaults by other institutions, including Goldman Sachs.
• The accuracy and completeness of credit risk information used by Goldman Sachs may impact the company negatively.

Competition

• The composition of the client base could influence the company's financial results.
• The financial services industry is characterized by intense competition.
• The rise of electronic trading and the introduction of new products and technologies, including cryptocurrencies, have intensified competition.
• Attracting and retaining qualified employees is crucial for the company to maintain its competitive edge.

Market Developments and General Business Environment

• Unforeseen or catastrophic events like pandemics, terrorist attacks, extreme weather events, or natural disasters could have adverse effects on the company's businesses, financial condition, liquidity, and financial results.
• Climate change poses potential disruptions to the company's operations and could affect client activity levels and counterparties' creditworthiness, potentially impacting the company's reputation.
• The discontinuance of Interbank Offered Rates (IBORs), particularly USD LIBOR, could adversely affect certain businesses and funding instruments.
• Changes in other reference rates, currencies, indexes, baskets, or ETFs that Goldman Sachs offers or raises funding against may have adverse impacts on certain businesses and funding instruments.
• New business initiatives and acquisitions introduce enhanced risks as the company engages in new activities, operates in different locations, transacts with diverse clients and counterparties, and explores new asset classes and markets.
• Realizing expected benefits or synergies from acquisitions or other business initiatives might not occur as planned or within the expected timeframe.

Valuation

ccc

Appendix

Dividends

The median dividend growth rate between now and 1999 is 9.76%. The standard deviation of the growth rate is 15.95%, suggesting that the growth rate is somewhat unpredictable and may be more likely to deviate from the average. Accordingly, we suggest valuing the business using the free cash flow approach, rather than the dividend approach.

Goldman Sachs Dividends

Year	Q1	Q2	Q3	Q4	Total	Growth rate (%)
2023	2.50
2022	2.00	2.00	2.50	2.50	9.00	38.46%
2021	1.25	1.25	2.00	2.00	6.50	30.00%
2020	1.25	1.25	1.25	1.25	5.00	20.48%
2019	0.80	0.85	1.25	1.25	4.15	31.75%
2018	0.75	0.80	0.80	0.80	3.15	8.62%
2017	0.65	0.75	0.75	0.75	2.90	11.54%
2016	0.65	0.65	0.65	0.65	2.60	1.96%
2015	0.60	0.65	0.65	0.65	2.55	13.33%
2014	0.55	0.55	0.55	0.60	2.25	9.76%
2013	0.50	0.50	0.50	0.55	2.05	15.82%
2012	0.35	0.46	0.46	0.50	1.77	26.43%
2011	0.35	0.35	0.35	0.35	1.40	0.00%
2010	0.35	0.35	0.35	0.35	1.40	-7.69%
2009	0.47	0.35	0.35	0.35	1.52	8.33%
2008	0.35	0.35	0.35	0.35	1.40	0.00%
2007	0.35	0.35	0.35	0.35	1.40	7.69%
2006	0.25	0.35	0.35	0.35	1.30	30.00%
2005	0.25	0.25	0.25	0.25	1.00	0.00%
2004	0.25	0.25	0.25	0.25	1.00	35.14%
2003	0.12	0.12	0.25	0.25	0.74	54.17%
2002	0.12	0.12	0.12	0.12	0.48	0.00%
2001	0.12	0.12	0.12	0.12	0.48	0.00%
2000	0.12	0.12	0.12	0.12	0.48	0.00%
1999	0.12	0.12	0.12	0.12	0.48
Mean						14.60%
Median						9.76%
Mode						0.00%