bank rates

Savers Could Benefit From Goldman Buy

Goldman Sachs Bank USA, the banking unit of financial services giant The Goldman Sachs Group, has announced that it will acquire the online banking platform and assume the deposits of GE Capital Bank, the wholly owned banking subsidiary of General Electric.

Completion of the transaction is subject to regulatory approval. No time frame was announced.

The deal represents Goldman Sachs Bank’s initial foray into the online banking business.

The deposits to be transferred by GE Capital Bank currently consist of approximately $8 billion of online savings and CD accounts, and $8 billion of brokered CDs (CDs issued through intermediaries such as Vanguard and Fidelity Investments).

The transaction reflects an ongoing plan by General Electric to exit entirely from U.S. banking operations.

This plan also includes GE’s divestiture of Synchrony Bank, which the manufacturer began disposing of last year through a combination of public sale and spin-off to GE shareholders of the stock of Synchrony Financial.

Goldman Sachs Bank USA is a New York State-chartered bank having approximately $128 billion in total assets. Deposits are insured by the FDIC, and it earns a stellar five out of five stars from Bankrate’s Safe & Sound rating system.

To date, Goldman Sachs Bank hasn’t engaged in retail deposit-taking but has funded its operations through the sale of brokered CDs.

Its brokered CDs have consistently offered yields among the highest available for their maturities in the brokered CD marketplace.

And often those yields (which may reflect haircuts for commissions or concessions associated with brokered, but not directly issued, CDs) are competitive with the best nationally available returns from the banks on our CD Rates Leaderboard.

Here, for example, are the yields to maturity for the current offerings of Goldman’s 3-, 4- and 5-year certificates of deposit available through online broker Fidelity Investments, compared with the top Leaderboard APYs.

Goldman Sachs vs. Leaderboard CD Rates

Term Goldman Rate Leaderboard Rate
3-Year CDs 1.70% APY 1.85% APY
4-Year CDs 2.05% APY 2.00% APY
5-Year CDs 2.35% APY 2.45% APY

Given Goldman’s rate history – as well as the rate competitiveness demonstrated by GE Capital Bank prior to GE’s announcement of its potential sale earlier this year – my guess is that this deal will benefit savers and that we’ll be seeing a lot of Goldman Sachs Bank on the CD Rates Leaderboard.

There’s only one hitch.

It’s that those, like me, who like both of these federally insured banks will only have one of the two left to put our money into, and it may not be as much as we’d like because of FDIC insurance limits.

Oh, well.

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  1. A.Bundy said:
    on September 3rd at 12:03 pm

    glad to see that the government lied and did not keep their word on raising interest rates. no way would i put a penny in Goldman Suchs (pun intended) knowing that they played a part in the recession that we are still in today. The only people that benefit from Goldman Sachs is only Goldman Sachs.