NEW YORK - Goldman Sachs aims to double its lending over the next five years to ultra-wealthy private bank clients with account sizes exceeding $10 million, as it gathers more deposits to supercharge lending, the bank's private banking chief told Reuters.
The lending push is a silver lining from Goldman's ill-fated consumer business. While the expansion into retail banking largely flopped and was unpopular among some employees and investors, it still attracted a surge of deposits into consumer savings accounts. The unit posted record growth in financing in the first quarter for trading and private equity clients, by providing short-term loans to clients using their holdings such as real estate assets or securities as collateral.As its deposits swelled, "we have grown, and will continue to grow, lending across our institutional businesses," Somaiya said.
"There's a real opportunity for us to grow in our private banking activities," given that gap, Somaiya said. Goldman has set a target to boost the unit's ROE from a current 9.9% to a mid-teens percentage in the medium term. Lending is seen as a strategic tool to expand Goldman's services to its ultra-high net worth clients who have a broad choice of lenders and are infrequent borrowers. "We can provide them leverage often against illiquid assets, if they need lending for an acquisition - home, hobby, another company, sports team - or want to use a margin loan against securities to invest more," Somaiya said.