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Goldman Sachs Is Buying GE's Online Retail Bank

Now any regular Joe can do their banking with Wall Street's most elite firm.

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Goldman Sachs is acquiring an online bank that accepts deposits ranging from $1 to $1 million. It means regular savers will be able to keep their money with Goldman, but put down way less than the $10 million balance you need to be a client of the firm's private bank.

The deal, announced today with no terms disclosed, is for one of General Electric's financial businesses, GE Capital Bank, as part of the industrial conglomerate's planned dissolution of GE Capital.

Goldman will acquire about $16 billion of the bank's deposits, $8 billion in online accounts and $8 billion in certificates of deposit. Goldman said it would keep the company's employees who work with its online deposits. The bank is chartered in Utah and doesn't have any physical assets, like branche,s that go to Goldman Sachs. Goldman's banking subsidiary, GS Bank, is chartered in New York.

"Nothing will change for GE Capital Bank customers," the company said today.

The bank's online savings account pays 1.04% interest and its CDs pay 1.98% for terms of five years.

The deal is part of Goldman's efforts to change how it funds itself. Old fashioned retail deposit accounts, like those offered by GE Capital Bank, offer a source of funding that doesn't run-out after a set period of time, unlike debt instruments sold by Goldman Sachs itself.

Investment banks that depended on very short-term financing, like Lehman Brothers, could collapse quickly if their lenders lost confidence in their ability to pay them back.

"This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel," Goldman's treasurer Liz Beshel Robinson said in a statement.

Goldman currently has $89 billion worth of deposits, about 12% of its total liabilities, which has roughly tripled since 2008, Beshel said in a conference call. Goldman's balance sheet is $860 billion. The bank's has $88 billion in equity from shareholders and the rest is funded through debt.

While the deal will mean that normal people can have an online savings account of as little as $1 and as much as $1,000,000 through a Goldman Sachs-owned entity, the deal is not part of Goldman's planned push into online consumer loans, a person familiar with the matter said.

Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.

Contact Matthew Zeitlin at matt.zeitlin@buzzfeed.com.

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