Goldman Sachs Said To Create In-House Private Bank

Tom Burroughes

17 July 2012

Goldman Sachs, the Wall Street-listed investment banking giant, is creating an in-house private bank to serve wealthy customers around the world as it seeks to recalibrate its business, according to the Wall Street Journal.

The bank is designed to boost Goldman Sachs’ deposits, which is a relatively cheap source of funding and less vulnerable to movements in financial markets, such as short-term money market rates, the article said.

The bank was not available for comment at the time that this publication went to press. In the past, Goldman Sachs has been reticent about any of its wealth management activities or goals when approached by WealthBriefing.

The report said the new unit will also lend more directly to corporations, some of which already make investments and do business with Goldman Sachs. Bank executives have set a goal of $100 billion in loans, up from $12 billion at the end of March. The development, however, will not involve any retail branches, Lloyd Blankfein, chief executive, told theWSJ.

Goldman converted into a bank holding company in 2008 to get access to emergency funds from the Federal Reserve when the financial crisis was at its height.

The firm remains best known for its role as an investment bank. It has been caught in controversy for activities such as its role in selling complex mortgage-linked securities to investors while taking advice, so it was claimed, from John Paulson, the hedge fund manager who famously predicted the collapse in the price of such securities. Goldman Sachs executives have also featured prominently among people appointed to high-profile roles in the US government, such as Hank Paulson, former US Treasury Secretary in the George W Bush era, and Robert Rubin, who held the same post in the Clinton administration.