Days after the collapse of Lehman Brothers and emergency sale of Merrill Lynch to Bank of America in September 2008, Wall Street’s last two independent investment banks, Goldman Sachs and Morgan Stanley, made a shocking move.
The pair, which had been mainly reliant on bond markets for funding, converted themselves into bank holding companies regulated by the US Federal Reserve so they could raise deposits and have access to emergency central bank funding, if needed.
But Goldman Sachs already had gained access to another central bank, the European Central Bank (ECB), the previous October when it set up a banking subsidiary in Dublin, called Goldman Sachs Bank (Europe) plc. Its deposits would peak at almost $8 billion, mainly corporate savings, in 2009.
Goldman would hand back the Irish banking licence in early 2013. For various reasons. The need for an Irish deposit base had eased. By then, the unit had sold a key business, a hedge fund servicing business. And a €160,000 Central Bank fine in 2011 for an administrative breach, which it had self-reported to the regulator, had left a sour taste.
Twelve years later, Goldman appears to be back. This time it has designs on Irish household savings, through its Marcus online banking business.
Bloomberg reported on Tuesday that Marcus has held preliminary talks with regulators in recent months on a potential widening of the brand, which is present in the US and UK, into the Republic. Germany has also been mentioned as the potential next market for the brand.
[ Goldman boss isn’t too big a jerk to bank an $80m bonusOpens in new window ]
If Marcus does launch in Ireland, it won’t be your go-to for a holiday loan or a mortgage.
While Marcus – named after the group’s German-American founder – was set up in 2016 as provider of deposit products and personal loans, it has since abandoned its consumer loans ambitions to focus on deposits. These are used to diversify the funding for the wider Goldman group’s trading and lending businesses, which were traditionally supported by money raised in the capital markets.
On the face of it, Ireland’s retail deposits market appears to be a honey pot waiting to be tapped. Irish households have about €162 billion of cash sitting in banks – 87 per cent of which is earning little or nothing in on-demand and current accounts.
This hasn’t gone unnoticed. Digital banks Revolut, N26 and Bunq and savings platforms Raisin and Trade Republic have all chased Irish deposits in recent years. Avant Money, which recently became a branch of its Spanish banking parent Bankinter, plans to launch deposit products in the coming months.
Still, just 2 per cent of Irish household deposits are held outside the three Irish domestic banks, notes Goodbody Stockbrokers analyst Denis McGoldrick. Inertia is so engrained here that even local banks have been surprised by how few have bothered to move money from accounts earning nothing to higher-rate products.
What makes Goldman think it will have better luck?
