Goldman Sachs said on March 17 it would pay $5.5 billion to repurchase the preferred stock bought by billionaire Warren Buffett's Berkshire Hathaway at the height of the 2008 financial crisis. The Wall Street giant said the US central bank had given a green light to its capital plan for this year.
"The Federal Reserve has concluded that it has no objection to Goldman Sachs' proposed 2011 capital actions, which include the redemption in full of the 50,000 shares" of the company's preferred stock owned by Berkshire Hathaway, it said in a statement.
Buffett, known as the "Oracle of Omaha" for his investment savvy, invested $5 billion in Goldman at the height of the financial crisis, signalling confidence in the Wall Street titan. Goldman pays 10 percent interest on those preferred shares, bringing the buyback to $5.5 billion, and also will pay a one-time dividend of $1.64 billion. Goldman said the redemption will be made on April 18.
The capital plan includes a "potential" increase in common stock dividend, the firm said. Buffet, who recently said in an annual letter to shareholders that he was "itchy" for more take-overs, is the third-richest person in the world with net worth of $50 billion, according to the Forbes annual list published last week. On March 14, Berkshire Hathaway said it was buying chemicals group Lubrizol for $9.7 billion.
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