Goldman (GS) Paying Berkshire (BRK-A) $5.65 Billion

The Goldman Sachs Group Inc. (NYSE:GS) announced Friday it has received permission from regulators to spend $5.65 billion to repurchase Berkshire Hathaway's (NYSE:BRK-A) preferred shares in the bank.

Goldman said the Federal Reserve has approved its plan to repay Warren Buffett's company for the $5 billion investment it made at the height of the financial crisis in the fall of 2008.

Goldman was eager to repay Berkshire because it had been paying 10 percent interest on the preferred shares, which translated into an annual expense of $500 million.

"Berkshire Hathaway's 2008 investment in Goldman Sachs was a major vote of confidence in our firm and we are very appreciative of it," Goldman spokesman Stephen Cohen said.

The repurchase will weigh down Goldman's first-quarter earnings by $2.80 per share because it includes a one-time preferred dividend of about $1.65 billion.

The Federal Reserve also approved Goldman's overall capital spending plan for 2011, including the repurchase of common stock and a possible increase in the bank's quarterly dividend. But Goldman did not announce any stock purchase or dividend plans on Friday.

Goldman closed Friday at $159.96, up $4.21, or 2.70 percent. Berkshire closed at $124,700, up $675, or 0.54 percent.




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