Goldman seeks new revenue in push for EU banking transactions
Goldman Sachs is rolling out its transaction banking services in the EU with a new team based in Frankfurt, while continuing to diversify beyond its trading and advisory services.
Since launching the business – specializing in services for corporate treasuries – in the US in 2020 and expanding into the UK a year ago, Goldman has attracted more than 400 clients with $65 billion of deposits.
Jim Esposito, co-head of Goldman’s investment banking, told the Financial Times that the bank is also considering opening transaction banking offices in Amsterdam and Japan in the short term, in a bid to gain market share from leaders such as JPMorgan and Citigroup.
“We need to obtain various banking licenses and regulatory approvals,” he said. “But we’re doing it with the intention, in a very focused way, of becoming as global as we need to be.”
The expansion into transaction banking is part of a group-wide strategy under chief executive David Solomon to expand beyond the core trading and advisory areas of investment banking, where it is a market leader, and in lines of business that provide stable and recurring revenue streams.
The group’s transaction banking platform, known as TxB, offers services such as cash management and corporate treasury. Esposito said the vast majority of the customers he picked up were already bank customers.
“It’s a perfect case study for what David wanted to see from Goldman Sachs,” Esposito said. “It fits like a tight glove. It’s new growth, with member-based, sustainable and recurring income.
The global expansion is part of a drive to offer deposit and payment services to customers in more than 160 countries and 120 currencies.
The expansion comes as Goldman is relaunching its annual weeding of underperforming bankers, which is expected to see hundreds of employees laid off in the coming weeks.
The process – which was halted during the height of the coronavirus pandemic as banks struggled to cope with the workload – typically results in between 1 and 5% of the company’s employees losing their jobs, the imminent review that would lead to layoffs. towards the lower end of this range.
The planned layoffs are indicative of broader concerns in funding job cuts amid declining trading activity and slowing economic growth in the United States and Europe.
At the end of June, Goldman had about 47,000 employees in investment banking, trading, asset and wealth management, consumer banking and operational functions.