The Daily Telegraph

Goldman cools on Marcus retail arm amid heavy losses

- By Simon Foy

GOLDMAN SACHS is sidelining its retail bank, Marcus, to focus on its more profitable arms in an about-turn for chief executive David Solomon.

The decision to pull back from its strategy of trying to build a consumer banking operation forms part of a major reorganisa­tion of the business and comes just four years after it launched Marcus in the UK.

The Wall Street behemoth invested significan­tly to build Marcus and was offering a far higher rate of interest for savers to deposit savings with them compared with retail rivals.

Since becoming chief in 2018, Mr Solomon has sought to expand Goldman’s footprint in retail banking. But the consumer banking unit that launched in the US in 2016 has struggled to gain traction and has suffered heavy losses.

Internally, the bank forecast that Marcus’s losses would climb to more than $1.2bn (£1.1bn) in 2022, taking cumulative losses to more than $4bn, Bloomberg reported. Goldman declined to comment on the loss.

Mr Solomon has previously said the business could generate revenues of more than $4bn by the end of 2024, while it posted net revenue of $1.49bn in 2021. The unit has around $100bn in deposits and serves 14m customers.

Mr Solomon told CNBC: “As we’ve learned, the concept of really being broad with a consumer footprint is not really playing to our strength.”

The reorganisa­tion came as Goldman’s traders helped rescue results during the third quarter following a sharp slowdown in investment banking. The trading business posted revenues of $6.2bn between July and September, an

‘I would attribute Goldman outperform­ance to the pullback from the consumer business and solid results’

11pc increase on the same period last year that was better than analysts had expected. Investment banking revenues fell by more than half.

Brennan Hawken, an analyst at UBS, said: “I would attribute the outperform­ance in Goldman Sachs to a combinatio­n of the pullback from the consumer business and solid results.”

The reorganisa­tion will also involve combining its trading and investment banking divisions. Shares in Goldman climbed more than 3pc in New York.

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