Goldman Sachs wants to raise up to £ 100bn from UK savers to inject into its investment bank
Goldman Sachs wants to raise up to £ 100 billion from UK savers to inject into its investment bank.
Currently, large banks with over £ 25bn on deposit from savings and checking clients cannot use funds from their investment bank and commercial branch.
The Mail on Sunday understands that US giant Goldman Sachs has asked an official review panel to relax these strict cantonment rules and pushed for the threshold to rise to £ 100 billion before restrictions enter in force. This would allow him to use billions. more pounds from UK clients for risky investment bets.
Claim: A source said the £ 25bn threshold could delay Goldman Sachs in launching a UK current account through its digital brand Marcus
A source said the £ 25 billion threshold could delay Goldman Sachs in launching a UK current account through its digital brand Marcus. Goldman Sachs has reportedly considered a UK current account, but sources said he was concerned this could push his deposits above the threshold. Marcus, who offers a savings account, has attracted £ 21bn from UK clients with the highest interest rates. He paused new applications during the summer to limit incoming flows.
The cantonment was put in place after the global financial crisis to protect savers and current account customers, when it became apparent that banks had endangered the deposits of ordinary savers by channeling them into their “bank” operations. casino ”, where traders made high-risk bets on the housing market that turned sour.
The Treasury commissioned a review of the rules in April, though the protections only came into effect in 2019. The review committee, led by city veteran Keith Skeoch, is expected to make an announcement next month on the impact of cantonment on the mortgage market. and competition in the banking sector.
Sources said other banks with large investment banking operations had not pushed for the limit to be increased. A banker said: “HSBC and Barclays cannot use their retail deposits to fund [trading] because they all exceed £ 25 billion. But institutions that fall short can raise UK retail deposits and use them to fund transactions. It is very unusual to have a rule that favors competitors over the domestic market [banks]. The debate is: are you doing it [loophole] bigger, or smaller? ‘
The review committee may recommend increasing or decreasing the limit. The latter would hit foreign banks and fast growing lenders in the UK. A cut would also hit US giant JP Morgan, which launched UK digital bank Chase in September.
UK Finance, the body representing the banks, asked the review to consider dismantling the cantonment if the panel finds evidence that its cost outweighs its benefits.
But Sam Woods, deputy governor of the Bank of England, who helped craft the rules, said he would defend them until his “last drop of blood.” Goldman Sachs declined to comment.