U.S. President Barack Obama’s plan to limit financial risk-taking could force banks, such as Goldman Sachs or JPMorgan, to shed parts of their private equity operations.
Among the proposals, which require congressional approval, is that banks or financial institutions that own banks would not be able to own, invest in or sponsor private equity funds unrelated to serving customers.
A number of banks have sizeable private equity interests, for example, JPMorgan’s One Equity Partners, manages $8 billion of investments and commitments for the bank, while Goldman Sachs has a vast private equity business, and invests its own capital in its funds.
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