Volcker Rule caps
The Volcker Rule, a centerpiece of the 2010 Dodd-Frank financial-overhaul legislation, was approved by government agencies last month. The rule prohibits banks from owning more than 3% of a hedge fund or private equity portfolio.Last November, Goldman Sachs Group Inc (GS - Get Report)'s CEO Lloyd Blankfein announced that the firm would begin winding down hedge funds to comply with the Volcker Rule.
Citigroup and other banks shedding assetsLast year Citigroup Inc (C - Get Report) sold the Citi Venture Capital International private equity fund valued at $4.3 billion to the Rohatyn Group for an unknown price. Citigroup also sold its $1.9 billion EM hedge fund last year. According to Sabrina Willmer and Kiel Porter of Bloomberg, Citigroup Inc (C - Get Report) sold its Metalmark Capital private-equity business last year and spun out its internal hedge fund unit, renamed Napier Park Global Capital, to conform to the Volcker Rule. JPMorgan Chase & Co. (JPM - Get Report), too, sold One Equity Partners, its hedge fund operation with $4.5 billion AUM, to the fund management and Bank of America Corp (BAC - Get Report) sold funds in 2011 and 2010 worth $5 billion and $1.4 billion respectively. Shayndi Raice of The Wall Street Journal points out that Citigroup Inc (C - Get Report) shed $8.5 billion in private-equity holdings last year alone. Interestingly, Citigroup executives have acknowledged for some time that they will need to sell the stake or ask for an extension to comply with the Volcker rule.
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