Why Goldman Sachs wants to get into British banking: Marcus will launch with savings in the UK but mortgages and current accounts may follow
- Goldman Sachs is set to open a UK consumer arm within months
- The new lender, which is named Marcus, will offer savers market-leading rates
- It is already running in the U.S. with £16.7bn of deposits and 1.5m customers
Goldman Sachs is poised to launch an assault on the British banking market by opening a UK consumer arm within months that will offer savers market-leading rates.
The new lender, which is named Marcus after the firm's founder Marcus Goldman, will aim to lure customers with interest rates that get on to the best-buy tables, as This is Money revealed earlier this month.
Sources said that Marcus, which will be an online-only bank, will start small with savings accounts but aim to attract deposits with eye-catching interest rates. It eventually intends to offer mortgages and current accounts as well.
Goldman Sachs is poised to launch an assault on the British banking market by opening a UK consumer arm within months that will offer savers market-leading rates
It is already up and running in the US with £16.7billion of deposits and 1.5million customers, and is expected to begin taking deposits in the UK this autumn.
That will coincide with the elevation of David Solomon to the top job at Goldman.
The 56-year-old, an avid wine collector and dance music fan who DJs under the name D-Sol, takes over from the bank's current boss Lloyd Blankfein on October 1.
Goldman's push into retail banking under Solomon marks the latest challenge to more established High Street lenders. But it may be of even bigger concern to newer upstarts such as Monzo and Atom that do not have Goldman's financial clout.
There are likely to be fears that Goldman's near-limitless financial resources will enable it to rapidly steal business from these so-called challenger banks.
This is Money revealed at the start of July how Goldman was planning to target UK savers
The launch of Goldman's UK lender will coincide with the elevation of David Solomon (pictured here DJing) to the top job at Goldman
The operation will be run by around 150 staff based in London, headed by former TSB director Des McDaid.
It marks a major departure for Goldman, one of the world's most famous investment banks, which has traditionally catered just for businesses and the ultra-rich.
The bank has a reputation for pursuing profit at all costs, and Blankfein was attacked by critics during the financial crisis for saying he was doing 'God's work' when high-risk lending brought the world economy to the brink.
However, savers who choose to park their money with Marcus will probably be reassured by its owner's 149-year history and £1.5trillion balance sheet.
As long as deposits with Marcus do not hit £25billion, it will be spared the complicated ringfencing rules which force big British lenders to separate ordinary savers' money from risky investment banking operations.
This means Goldman will be able to use the funds it gets from customers for trading and other high-reward activities.
As with banks in Britain, customers' deposits will be protected up to the value of £85,000 per person by the Financial Services Compensation Scheme.
THIS IS MONEY'S FIVE OF THE BEST CURRENT ACCOUNTS
Chase Bank will pay £1% cashback on spending for the first 12 months. Customers also get access to an easy-access linked savings account paying 3.8% on balances up to £250,000. The account is completely free to set up and is entirely app based. Also no charges when using the card abroad.
Nationwide's FlexDirect Account offers 5% in-credit interest to new joiners when they switch on balances up to £1,500. This rate only lasts for one year. The account is fee free.
Halifax Reward Account pays £150 when you switch. Also earn up to an extra £75 cashback when you spend £750 each month for 3 months. There is a £3 monthly account fee, but that’s stopped by paying in at least £1,500 each month.
First Direct will give newcomers £175 when they switch their account. It also offers a £250 interest-free overdraft. Customers must pay in at least £1,000 within three months of opening the account.
NatWest's Select Account account pays £200 when you switch. The account has no monthly charges, but to be elligible for the £200, you'll need to deposit £1,250 into the account and log into mobile banking app within 60 days.
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