Goldman Sachs Group Inc., the largest and most profitable U.S. securities firm, is "highly unlikely" to buy a retail banking operation, Oppenheimer & Co. analyst Meredith Whitney wrote in a note to investors Wednesday.

"While much speculation has been made about Goldman's interest in acquiring a retail bank, we believe the chances are less than slim," wrote Ms. Whitney, after a meeting Tuesday with Goldman executives. "Management stated frankly that it was highly unlikely given the current regulation."

Ms. Whitney's note came just days after Merrill Lynch & Co. analyst Guy Moszkowski told investors they should not "rule out" a bank acquisition by Goldman. Though Mr. Moszkowski said a transaction looked unlikely if it would force Goldman to quit businesses such as commodities, he noted that JPMorgan Chase & Co. was allowed to keep the commodity business it gained in acquiring Bear Stearns Cos.

Merrill's sale of collateralized debt obligations this week for $6.7 billion, or 22% of their face value, may give Goldman an opportunity to buy similar assets, Ms. Whitney wrote. She issued her research report after a meeting with Goldman chief financial officer David Viniar, co-president Jon Winkelried, and Goldman's head of investment banking David Solomon.

"Last year Goldman raised a several-billion-dollar fund to buy distressed mortgage assets, yet to date [it] has put little to use," Ms. Whitney wrote. After the sale by Merrill, "it is likely in our opinion that more portfolios are put on the market."

Goldman's executives said the current market creates "strong headwinds to earnings growth," Ms. Whitney wrote. The company has cut the bottom 10% of its employees instead of the usual bottom 5%, she wrote.

Ms. Whitney rated Goldman shares "perform."

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