How much will make Goldman’s 1MDB problems go away?

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A new sport in southeast Asia banking circles is guessing how much it will take for Goldman to settle with the Malaysian state over 1MDB.

We now know the parameters within which the true figure will fall. Malaysia wants $7.5 billion, and won’t get it. Goldman Sachs, says prime minister Mahathir Mohamad, has offered less than $2 billion, and that’s not enough.

Mahathir told the FT: “If they respond reasonably, we might not insist on getting that $7.5 billion.”

So, what’s the figure? A popular answer in the investment banking community is $4 billion. But would Goldman pay it?

For a while, in the earlier stages of the scandal, it looked like Goldman might not offer anything: it doesn’t have a huge amount of business in Malaysia anyway, and it is hard to see over what timeframe it could possibly accrue $2 billion of fees from the country.

The disputed capital raisings around 1MDB made Goldman about $600 million, and it has never been clear where the $7.5 billion figure Mahathir names came from in the first place.

Nevertheless, the reputational hit to Goldman is considerable and long-lasting, and it is understandable that it would want to draw a line under it.

In that respect, though, Malaysia is not the biggest worry: that’s the Department of Justice, which will draw its own conclusions about what Goldman owes. That decision has been a long time coming and Goldman won’t really be able to move on until it comes.