Goldman Sachs creates $100B private bank for the rich

Investment bank Goldman Sachs wants to create a conventional bank catering exclusively to the superrich, the Wall Street Journal said Tuesday.

The iconic Wall Street firm, whose core business consists of reaping profits from trading fees and commissions culled from brokering multibillion-dollar deals, hopes to raise $100 billion by ramping up dealings with its wealthy customer base around the world.

The move comes amid a backdrop of increased regulation for investment banks' core businesses and the outsized bonuses and returns those activities often generate for shareholders and employees.

On Tuesday, Goldman reported that its second-quarter profits fell 11 per cent because of declines both in the trading business and fewer commissions from mergers and acquisitions.

Goldman's traditional investment banking business is funded by borrowing cash, as needed, against the assets the bank holds on its balance sheet. Moving into a more traditional banking business of savings and loans will give the bank a more dependable, lower-cost source of funds for its other operations.

But the bank has no intention of opening bricks and mortar locations or rolling out a network of ATMs, the report said. Rather, it will simply increase the amount of money it loans and holds for its extensive network of wealth management clients. Those customers will have the option of maintaining deposits, even taking out a mortgage from the Wall Street firm.

When asked for comment on the plan by CBC News, no one at Goldman Sachs was immediately available.