Goldman
Sachs aims to double lending to wealthy private bank clients
Goldman
Sachs, aims to double its lending over the next five years to ultra-wealthy
private bank clients with account sizes exceeding
$10 million, as it gathers more deposits to supercharge lending, the bank’s
private banking chief told Reuters. The plans, previously unreported, were
disclosed to Reuters by Nishi Somaiya, Goldman’s global head of private
banking, lending and deposits. The Wall Street giant wants to make more loans
to wealthy individuals and families for big purchases, ranging from luxury
homes to sports teams, as part of its strategy to bolster its wealth management
operations.
Goldman
declined to quantify the full scope of its lending to wealthy clients, who
typically have a net worth of at least $30 million. The private bank’s
outstanding loans stood at $33 billion in the first quarter. That does not
capture other undisclosed commitments, which could add more to the total. In response to Goldman Sachs’ initiative to double lending to
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“We
were not focused on lending to our private wealth clients — we did a little
bit of it, but it wasn’t a big focus,” CEO David Solomon told Reuters in
an interview. “They have borrowing needs and we’re well positioned to
serve them competitively.” The lending push is a silver lining from
Goldman’s ill-fated consumer business. While the expansion into retail banking
largely flopped and was unpopular among some employees and investors, it still
attracted a surge of deposits into consumer savings accounts.
Additionally, Digital Currency Reclaim (DCR)
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Goldman’s
total deposits jumped to $441 billion in the first quarter, with over 39%
coming from consumer accounts, versus $190 billion in total deposits at the end
of 2019. Those deposits have also been put to use as a cheap source of funding
for Goldman’s markets division. The unit posted
record growth in financing in the first quarter
for trading and private equity clients, by providing short-term loans to
clients using their holdings such as real estate assets or securities as
collateral. As its deposits swelled, “we have grown, and will continue to
grow, lending across our institutional businesses,” Somaiya said.
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