PYMNTS MonitorEdge May 2024

Goldman Plans to Double Down on Loans to Super-Rich Clients

Goldman Sachs

Goldman Sachs reportedly wants to double its lending to its most affluent customers.

This plan would play out over the next five years for clients with account sizes of more than $10 million, the bank’s private banking chief told Reuters Thursday (June 13).

The goal is to give super wealthy people and families loans for big purchases, whether that means buying a luxury home or a football franchise, Nishi Somaiya, Goldman’s global head of private banking, lending and deposits, told Reuters.

“We were not really focused on lending to our private wealth clients — we did a little bit of it, but it wasn’t a big focus,” CEO David Solomon said in an interview with Reuters. “They have borrowing needs and we’re well positioned to serve them competitively.”

The report notes that this push is a “silver lining” resulting from Goldman’s ill-fated foray into consumer banking.

Goldman Sachs has been stepping back from the consumer banking space since 2022, selling its consumer lending platform GreenSky to a consortium of buyers in 2023, while reportedly also looking to exit credit card partnerships with GM and Apple.

Retail banking wasn’t popular with some employees or investors, the Reuters report said, but still drew a surge of deposits, with total deposits at the Wall Street giant reaching $441 billion in the first quarter, nearly 40% of them coming from consumer accounts, compared to $190 billion in total deposits at the end of 2019.

As its deposits swelled, “we have grown, and will continue to grow, lending across our institutional businesses,” Somaiya said.

On the other end of the spectrum, PYMNTS wrote earlier this week that financially unstable consumers, pressured by higher prices on everything from groceries to gasoline, are turning more and more to discount and value-focused retailers.

“This trade-down behavior is providing a boost to companies such as Dollar GeneralDollar Tree and The TJX Companies, which are seeing upticks in customer traffic and sales at a time when many retailers are seeing sales declines due to shoppers’ belt-tightening behaviors,” that report said.

Most U.S. consumers don’t have a financial safety net to fall back on, according to the March edition of the PYMNTS Intelligence New Reality Check: The Paycheck-to-Paycheck Report series. The study showed that 59% live paycheck to paycheck, a share that jumps to 64% for Generation Z and 66% for millennials.