lunes, 9 de mayo de 2016

lunes, mayo 09, 2016

Goldman Sachs Drops the Velvet Rope for Savers

Wall Street firm is offering savings accounts and certificates of deposit from the website of its banking arm

By Justin Baer

         Joe Raedle/Getty Images


Goldman Sachs Group Inc., GS -1.00 % adviser to billionaires and the world’s largest companies, will now accept your couch-cushion money.

The financial firm most synonymous with Wall Street started offering savings accounts and certificates of deposit this month from the website of its banking arm, GS Bank. The firm will accept new customers with as little to save as $1, though they will need $500 to open a certificate of deposit.

The move was set in motion last August, when Goldman signed a deal to buy the online-deposit platform of GE Capital Bank. The transaction’s closing this month started the new era for the nearly 150-year-old firm run by Chairman and Chief Executive Lloyd Blankfein.

Goldman Sachs’s sudden fondness of small accounts is mainly driven by recent bank regulations that look more kindly on retail deposits. The bank also is looking to make more loans. Its core investment-banking and trading businesses suffered a tough first quarter, reviving some concerns about its strategy.

With the move, the New York company isn’t offering full-service retail banking. For example, its savings accounts don’t come with checking features, ATMs or Goldman branches to accept cash.

The main selling point, in addition to Goldman’s cachet: high rates.​The bank is touting a 1.05% yield on savings accounts, 1% on one-year certificates of deposits and 2% on five-year CDs.

Those rates are low historically, but much higher than what most large banks are offering these days. Goldman’s five-year CD provides a yield of between four times and 13 times the amount offered by the four largest U.S. banks— J.P. Morgan Chase JPM -0.58 % & Co., Bank of America Corp. BAC -0.99 % , Wells Fargo WFC -0.22 % & Co. and Citigroup Inc. C -0.60 %  BAC -0.99 % The yield on Goldman savings accounts exceeds the ones offered by its peers by a factor of about 100.

Still, Goldman is moving into a sector with experienced rivals. Goldman’s rates are competitive with other nationally available offerings, including those of Discover Financial Services, DFS 0.65 % Ally Financial Inc. ALLY -0.16 % and Synchrony Financial, SYF -0.20 % said Greg McBride, chief financial analyst at Bankrate.com. Like many banks that don’t have to maintain branch networks and the costs they entail, Goldman is able to offer higher yields than the biggest banks do, Mr. McBride said.

GE Capital, a unit of General Electric Co. GE -0.26 % , pitched identical rates on the savings accounts and CDs for its roughly $16 billion in deposits. Goldman chose to keep offering the same rates and used a similar look and feel for its website to help ease the transition for those existing depositors. The firm also inherited a call center in Cedar Rapids, Iowa, with about 100 employees to field requests and questions about the savings products.

The GE deal was part of a broader strategy by Goldman to collect more low-cost deposits it can then lend out to clients across each of its businesses, from investment banking to wealth management. Goldman’s GS Bank held about $88 billion in deposits as of Dec. 31, according to a regulatory filing. Much of that came from well-heeled clients in the firm’s wealth-management division, in which the average account has about $50 million.

The firm has pushed to increase deposits because of the strategy’s regulatory advantages.

Regulators have urged banks to become less dependent on short-term loans from other financial firms. Typically, big banks have used these funds to back bets, but the money quickly dried up during the 2008 financial crisis, exacerbating the market turmoil at the time. Deposits from consumers offer a steady and low-cost source of funding.

In 2009, GS Bank had just $32.9 billion in deposits. In February, Mr. Blankfein said the firm has looked to build its deposit base as it spots places to put that money to work in profitable loans. “We don’t go out and max out on deposits,” Mr. Blankfein said. “We source good investment or good lending opportunities and then get the funding.”

At its current size, Goldman’s deposit base is much smaller than those at Bank of America, J.P. Morgan and Wells Fargo. Those banks each had more than $1 trillion in deposits at the end of the first quarter. Morgan Stanley, MS -0.61 % Goldman’s closest rival, also has increased deposits to $157.6 billion as of March 31, up 16% from March 2015.

Goldman’s deposit efforts are overseen by Esta Stecher, a Goldman veteran who once helped oversee the firm’s legal team and who has run GS Bank since 2011. The firm also is pushing an online-lending project, dubbed “Mosaic” internally, to launch in the third quarter, people familiar with the matter said.

The lending unit, led by former Discover Financial Services executive Harit Talwar, plans to offer unsecured loans to individuals and small businesses, eschewing mortgages, auto loans and student loans, the people said. The business has hired about 90 people since Mr. Talwar came to the firm last year, they said.

While launching consumer businesses could bring new challenges and scrutiny to Goldman, regulators of late prefer consumer-finance activities to those tied to the capital markets, said Brian Kleinhanzl, an analyst with Keefe, Bruyette & Woods. “What these actions are showing you,” he said, “is that the regulatory environment is very tough right now for a traditional investment bank.”

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