Exclusive-Goldman Sachs to cut asset management investments that weighed on earnings

By Saeed Azhar NEW YORK (Reuters) -Goldman Sachs Group Inc's asset management arm will significantly reduce the $59 billion of alternative investments that weighed on the

bank's earnings, an executive told Reuters. The Wall Street giant plans to divest its positions over the next few years and replace some of those funds on its balance sheet

with outside capital, Julian Salisbury, chief investment officer of asset and wealth management at Goldman Sachs, told Reuters in an interview. "I would expect to see a

meaningful decline from the current levels," Salisbury said. "It's not going to zero because we will continue to invest in and alongside funds, as opposed to individual deals on

the balance sheet." Goldman had a dismal fourth quarter, missing Wall Street profit targets by a wide margin. Like other banks struggling as company dealmaking stalls,

Goldman is letting go of more than 3,000 employees in its biggest round of job cuts since the 2008 financial crisis. The bank will provide further details on its asset plan

during Goldman Sachs' investor day on Feb. 28, he said. Alternative assets can include private equity or real estate as opposed to traditional investments such as stocks and

bonds. EARNINGS VOLATILITY Slimming down the investments on a bank's balance sheet can reduce volatility in its earnings, said Mark Narron, senior director of North

American banks at credit rating agency Fitch Ratings. Shedding investments also cuts the amount of so-called risk-weighted assets that are used by regulators to determine the

amount of capital a bank must hold, he said.