Goldman’s European clients turn to derivatives to hedge risk

European clients of Goldman Sachs are increasingly turning to derivatives for ways to hedge risk, according to an internal report seen by Reuters.

Revenues from Goldman Sachs’ European division increased by 8% from the year-ago period to $476 million, the report said. Derivatives revenue was up 142%, year-to-date.

A big driver of the increase has been that clients have used derivatives to hedge bets in the stock and fixed-income markets. Clients are adjusting their balance sheets for counterparty credit risks, as well as European financial institutions seeking capital gains.

The figures suggest that steps taken by European regulators to stabilize capital markets have been effective and have set the stage for stronger-than-expected quarterly results for Wall Street investment banks, Reuters said.

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