Note 26.
Credit Concentrations
Credit concentrations may arise from market making, client facilitation, investing, underwriting, lending and collateralized transactions and may be impacted by changes in economic, industry or political factors. The firm seeks to mitigate credit risk by actively monitoring exposures and obtaining collateral from counterparties as deemed appropriate.
While the firm’s activities expose it to many different industries and counterparties, the firm routinely executes a high volume of transactions with asset managers, investment funds, commercial banks, brokers and dealers, clearing houses and exchanges, which results in significant credit concentrations.
In the ordinary course of business, the firm may also be subject to a concentration of credit risk to a particular counterparty, borrower or issuer, including sovereign issuers, or to a particular clearing house or exchange.
The table below presents the credit concentrations in cash instruments held by the firm.
| As of December | ||||||||
| $ in millions | 2013 | 2012 | ||||||
|
U.S. government and federal agency obligations 1 |
$90,118 | $114,418 | ||||||
|
% of total assets |
9.9 | % | 12.2 | % | ||||
|
Non-U.S. government
and |
$40,944 | $ 62,252 | ||||||
|
% of total assets |
4.5 | % | 6.6 | % | ||||
| 1. |
Substantially all included in “Financial instruments owned, at fair value” and “Cash and securities segregated for regulatory and other purposes.” |
As of December 2013 and December 2012, the firm did not have credit exposure to any other counterparty that exceeded 2% of total assets.
To reduce credit exposures, the firm may enter into agreements with counterparties that permit the firm to offset receivables and payables with such counterparties and/or enable the firm to obtain collateral on an upfront or contingent basis. Collateral obtained by the firm related to derivative assets is principally cash and is held by the firm or a third-party custodian. Collateral obtained by the firm related to resale agreements and securities borrowed transactions is primarily U.S. government and federal agency obligations and non-U.S. government and agency obligations. See Note 9 for further information about collateralized agreements and financings.
The table below presents U.S. government and federal agency obligations, and non-U.S. government and agency obligations, that collateralize resale agreements and securities borrowed transactions (including those in “Cash and securities segregated for regulatory and other purposes”). Because the firm’s primary credit exposure on such transactions is to the counterparty to the transaction, the firm would be exposed to the collateral issuer only in the event of counterparty default.
| As of December | ||||||||
| in millions | 2013 | 2012 | ||||||
|
U.S. government and federal |
$100,672 | $73,477 | ||||||
|
Non-U.S. government and |
79,021 | 64,724 | ||||||
| 1. |
Principally consists of securities issued by the governments of Germany, France and the United Kingdom. |