GS Bank: Goldman Sachs For The Masses?

Weinstein Co

Goldman Sachs is many things to the investment banking world.

The big bank for the big billionaires. The bravest market maker, taking up humongous risks with financial engineering second to none. But Goldman Sachs fondly called GS, is not known to associate with the poor.

GS is doing something opposite of this perception. The bank just launched GS Bank. It turns out that you can open an account with a minimum deposit of  USD 1 which is equivalent of NGN 320 using parallele market FX rate. In case you are not surprised, here is why this is a big deal:

To open a typical account with GS, you will need an average of USD 1o million. As a high-flying investment bank with an exotic taste for high-frequency risk, you are not guaranteed of getting your money back in case things turn sour just like what happened in 2008 when the global financial market dipped.

Conversely, with GS Bank anyone can open an account with USD 1 and GS is promising depositors close to USD 1.05 interest rate. This is far higher than the average interest rate in the US.

GS BANK
Source: GS Bank

On its website GS said the bank provides services such as:

  • Deposits: We take deposits from individual and institutional clients through a variety of channels including our online deposit platform at GSBank.com. GS Bank USA is a member of the Federal Deposit Insurance Corporation (”FDIC”), which insures deposits up to certain limits (see FDIC).
  • Private Bank Lending: We provide loans and residential mortgages to clients of our Private Bank and work with these clients to manage their cash flow needs, finance private asset purchases, and facilitate strategic investments. We also offer Capital Call Financing or Subscription Financing, which serves as an important working capital management tool for private equity funds.  
  • Corporate Lending and Risk Management: We make loans to our corporate and institutional clients, providing working capital, enhancing liquidity, and in connection with acquisitions. We also provide interest rate risk management services to these clients. 
  • Community Lending: Our Urban Investment Group supports underserved communities with a wide range of projects in affordable housing and economic and small business development. We are proud to have received Outstanding ratings from the Federal Reserve Bank of New York (“FRBNY“) and the New York State Department of Financial Services (“NYSDFS“) in their evaluations of our Community Reinvestment Act (“CRA”) record.

Why, How And To What Effect?

To make this happen, GS had acquired GE Capital Bank, an online bank owned by GE Capital. This move by GS is not unconnected from its move to diversify its revenue streams.

Investment banking has come under stress from losses incurred by investors, many of whom are deleveraging and investing more in less risky assets.

GS has come under fire for its role in the 2008 subprime mortgage crisis. GS recently pay a fine of USD 5.2 billion to settle the case. GS is also spreading its tentacles to emerging markets. The bank is an investor in Rocket Internet’s [ETR: RKET] Africa Internet Group, AIG.

 

See related Stories

AIG, Jumia’s Parent Company Raises Another $80 million

https://pageone.ng/2016/04/04/my-take-aig-is-not-worth-1-billion-value/

 

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