Goldman Sachs Retreats From Consumer Banking

Goldman Sachs no longer wants to be the bank for everyone. The storied investment bank spent eight years attempting to expand its business beyond corporations and the wealthy, Ken Sweet reported for the Associated Press (AP).

Photo Insert: The retreat in consumer banking comes as Goldman tries to refocus on its roots.

But in recent months, Goldman has signaled a partial retreat from those efforts by scrapping plans for a checking account broadly available to the public and mothballing its personal loan business.

A popular savings account and a credit card business survive for now. The online savings account is not going away and is considered an asset by the firm. The firm now holds more than $100 billion in retail deposits, which is a cheap form of capital for the investment bank that historically hasn’t had access to such forms of financing.

Last week, the bank disclosed that it had accumulated $3 billion in losses in its consumer banking franchise since 2020, mostly money set aside to cover potential loan losses in its consumer lending businesses.

Bank regulators are reportedly looking into whether the consumer business had proper safeguards in place as it grew larger.

The retreat in consumer banking comes as Goldman tries to refocus on its roots: Advising corporations on deals, investing, trading, and servicing the well-to-do. The firm’s revenue from investment banking, trading and wealth management made up two-thirds of total revenue last year.

“I think it became clear to us early in 2022 that we were doing too much, it was affecting our execution,” said David Solomon, Goldman’s chairman and CEO, in a call with analysts when the bank reported its results earlier this month.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic