Why Marcus is welcome

No financial group more symbolises the greed-is-good culture than goldman sachs. labelled the ‘vampire squid’ by Rolling stone magazine, its misbehaviour, ranges from helping greece fiddle its way into euroland to creating a rotten Us mortgage security for investor John Paulson and then selling it to others, including RBs.

But goldman learned lessons from the financial crisis when it came close to being dragged into the abyss by the lehman collapse.

Its dependence on wholesale finance was extraordinarily risky, and it was only with the assistance of wealthy investor Warren Buffett, who ploughed in capital for a stake, that it climbed out of the hole.

The bank learned the need to diversify its sources of capital. It addressed the problem by launching a retail banking operation in the Us, which has attracted $20bn (£15.3bn) of deposits, and focusing on wealth management. Britain is uniquely placed to take the new goldman model forward.

It runs its global operations from london, has an enormous footprint and has experimented in providing finance to smaller businesses. What it has now discovered is that Britain’s utility banking model is uncompetitive, especially when it comes to attracting savers.

Caught between the twin perils of heavy regulation and the demands for free current account banking, High street banks have taken savers for granted and, worse, exploited them.

HsBC’s First direct and santander’s 123 current account are among few efforts to break the mould. as an online start-up, Marcus (named after goldman founder Marcus goldman) offers a fresh choice.

lloyds Banking group, with a dominant role, offers loyal customers 0.2pc on their deposits. Marcus is offering savers 7.5 times that, with an interest rate of 1.5pc on deposits from £1 up to £250,000. It represents a breakthrough for savers because most of the other financial groups offering exceptional returns may have the word ‘secure’ in their names but are much less known.

However sceptical one might be about goldman, they are the cleverest people in town. That is why its alumni, including Bank of England governor Mark Carney, occupy some of the most powerful offices in world finance.

Marcus could genuinely challenge the sleepy High street banks and encourage them to do something decent for savers.

Fed threat

THE rise in american interest rates to a range of 2pc to 2.25pc may look as if it has nothing to with us. after all, with Brexit negotiations on a knife-edge, it is unlikely that the Bank of England will think a further rise in bank rate this year is sensible.

donald Trump may not much like the activism of america’s central bank, the Federal Reserve, which is signalling another possible rise in rates this year and three more quarter-points in 2019, lifting rates through the 3pc mark.

But in its own way the Fed chairman, Jay Powell, a Trump appointee, is engaged in his own ‘america First’ policy. Brushing aside trade disputes, Powell is focusing on runaway american growth and record low unemployment of 3.9pc, and raising concerns about a jump in inflation.

The Us drive to higher rates and the speedier unwinding of quantitative easing is not trouble-free. In the Us it is causing a late-cycle takeover boom such as Comcast’s £30bn deal for sky. Corporations are seeking to take advantage of cheap credit.

The really bad effects are being felt in emerging markets. Rising Us interest rates and yields exacerbate capital flight and hurt troubled nations such as argentina.

The stronger dollar resulting from higher rates is raising oil prices, putting additional pressure on many emerging markets.

Us rate rises may be gradual but don’t underestimate the ill effects.

Retail therapy

THE discomfort on Britain’s high streets is not just a UK event.

In France, Carrefour is looking at putting rival supermarket group Casino out of its misery. shares in sweden’s cheap and cheerful clothing champion H&M are sliding rapidly, with profits down 40pc on three years ago. It is test-marketing swisher stores in stockholm and web sales are climbing.

But the jury is out on whether it is equipped to take on asos, Boohoo and other fast-fashion newcomers.