Gold­man Sachs to buy GE Cap­i­tal's US online de­posits

The Pak Banker - - COMPANIES/BOSS -

Gold­man Sachs Group Inc is buy­ing GE Cap­i­tal Bank's US online de­posits, a move that will give the largest US in­vest­ment bank a more sta­ble source of fund­ing to help it bet­ter weather fu­ture crises.

The deal is rel­a­tively small, giv­ing Gold­man Sachs $16 bil­lion of de­posits to help fund its $860 bil­lion of as­sets. But it rep­re­sents the latest step in a his­toric shift for Gold­man, a stand­alone in­vest­ment bank that has been forced by reg­u­la­tors to look more like a uni­ver­sal bank since the fi­nan­cial cri­sis.

Lehman Broth­ers and Bear Stearns fal­tered in 2008 af­ter they could no longer bor­row from bond in­vestors and in other mar­kets. Reg­u­la­tors have been push­ing in­vest­ment banks since then to mimic com­mer­cial and uni­ver­sal banks and fund more of their as­sets with de­posits from con­sumers. In times of stress, de­posits are less likely to dis­ap­pear be­cause they are fed­er­ally in­sured.

Some of­fi­cials at the Fed­eral Re­serve, for ex­am­ple, pres­sured Gold­man Sachs to ac­quire re­tail bank Wa­chovia soon af­ter Lehman's col­lapse.

Gold­man Sachs con­sid­ered buy­ing online bank ING Di­rect, but Cap­i­tal One Fi­nan­cial Corp bought it in­stead in 2011, ac­cord­ing to a per­son fa­mil­iar with the bank's plans.

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