Goldman Sachs is set to buy back $5 billion of preferred stock it sold to Berkshire Hathaway back in 2008 when its stock plummeted in the wake of the Lehman Brothers collapse, Bloomberg reports.
The redemption will see Goldman incur a one-off fee of $1.64 billion. This will shrink the bank’s earnings per share in Q1 by $2.80, Goldman said.
Additionally, the purchase will also “cut earnings per share in the first quarter by 4 cents because it accelerates the payment of $24 million of preferred dividends.”
The buy back also means Goldman’s high-rankings executives will also be released from a stipulation that they retain 90% of their stock.
Goldman has been waiting for the Fed to approve the redemption, which allowed Warren Buffett to pocket $500 million a year in dividends.