Goldman Sachs: vampire minnow targets Britain
“The squid has grown a new tentacle,” said Alex Brummer in the Daily Mail. Eighteen months after throwing open its doors to the mass-market in America, Goldman Sachs, the so-called vampire squid of global finance, is extending its reach into UK retail banking. From next year, it will begin offering online savings accounts, under the brand name Marcus. As part of its British push, Goldman has also injected £100m into a local loan startup, Neyber, said City AM. The outfit, founded by two Goldman alumni, lends cash to individuals via their employers (repayments are deducted from the borrower’s salary). Existing customers include Bupa, the NHS, London City Airport and the police.
The moves reflect Goldman’s “steady march from Wall Street to Main Street” as its traditional business lines struggle, “crimped by new rules on risk-taking”, said Ben Mclannahan in the Financial Times. In July, Goldman’s market capitalisation slipped below that of Morgan Stanley, its closest rival, for the first time in more than a decade.
“Given the limp returns currently on offer in investment banking”, Goldman’s new career as a banking “minnow” is certainly worth a shot, said John Foley on Reuters Breakingviews. And being “fashionably late” to the UK market may be an advantage: unlike established rivals, Goldman starts free of “legacy issues” such as decrepit IT systems and mis-selling scandals. There’s another advantage too. Because the UK bank is buried in a group with $907bn of assets, shareholders won’t know exactly how it is performing until CEO Lloyd Blankfein “chooses to tell them”, or until it becomes a significant size. “In other words, Marcus can nurse losses for a good while without investors getting twitchy. Not many banks can do that.”