Goldman Sachs Group plans to sell a majority stake in its London-based insurance unit Rothesay Life over the next year, to comply with the new rules imposed on the banks after the financial crisis.
Rothesay Life which is a specialist pension business was established in 2007 and is run by the Goldman partner Addy Loudiadis. Goldman founded Rothesay which grabbed a £10bn ($15.5bn, €11.6bn) share of UK's pension market.
The move to offload the stakes came as Goldman responds to the new regulatory rules. Regulators have asked the bank to set aside more capital so as to keep a balance with the potential losses.
"Over time, as businesses like the reinsurance business are maybe better held in other people's hands and we can be a minority owner because of capital reasons, then we'll make those decisions," Goldman Chief Financial Officer Harvey Schwartz said in January.
Goldman earlier this year sold 80% of its other insurance business, reinsurer Global Atlantic Financial owing to the new capital rules. The sale was beneficial for Goldman as it increased its Tier 1 common capital ratio under Basel 3 rules by half a percentage point, Schwartz said last month.
MassMutual, US's mutual life insurer earlier this year infused £100m worth of debt to Rothesay. This was done to replace a loan that Goldman earlier had with the subsidiary.
Goldman in its quarterly filing with the US Securities and Exchange Commission said that as of June this year Rothesay holds $9.66bn in assets. Rothesay posted a pre-tax operating profit for £266m last year.
US banking giant Goldman Sachs posted double net profit in the second quarter this year after income from an investment banking surge was taxed at a lower rate. The net earnings rose 101% on year to $1.9bn.