Goldman Sachs (NYSE:GS), the largest U.S. investment bank, agreed to buy General Electric(NYSE:GE) financial services arm GE Capital’s online deposit platform, which includes US$16bn in deposits.
The amount includes about US$8bn in online deposit accounts and US$8bn in brokered certificates of deposit, the companies said.
Terms weren’t disclosed for the purchase, which is subject to regulatory approval.
GE Capital Bank takes deposits and sells certificates of deposit directly to consumers online. It has competed for deposits by offering slightly higher interest rates than traditional consumer banks give.
The deal will give Goldman an additional form of liquidity, particularly as the New York bank explores the possibility of entering the consumer lending business.
“This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit-gathering channel,” Liz Beshel Robinson, Goldman Sachs’s treasurer, said in a statement on Thursday.
Goldman has traditionally been an investment bank catering almost entirely to corporate clients. During the financial crisis, though, Goldman was forced to convert to a bank holding company.
Goldman had about US$89bn of deposit funding and about US$860bn in assets at the end of June.
For GE, the deal is the latest in its continuing dismantling of its financial-services business, which the industrial conglomerate announced in April.
“Coupled with the split off of Synchrony Financial, this transaction will facilitate our complete exit from U.S. banking operations, eliminate the exposure of the U.S. deposit insurance safety net to GE Capital and thereby significantly reduce our regulatory footprint in the United States,” GE Capital’s chief executive officer Keith Sherin said in a statement.
Synchrony Financial, the credit card unit of GE Capital, sold shares publicly last year, and is due to wholly split off from GE later this year in a share exchange.
GE agreed to sell its healthcare finance business earlier this week to Capital One Financial Corp. for US$9bn.
Shares of General Electric were up 0.2% at US$25.84 at 10:18 a.m. in New York, while shares of Goldman Sachs rose 0.7% to US$202.17.