Goldman Sachs creating in-house bank for the rich

On the same day Goldman Sachs is reporting its net income fell 11% in the April-to-June period after the investment bank’s clients made fewer deals and avoided volatility in global financial markets, The Wall Street Journal is reporting that the New York securities firm is building an in-house bank to lend money to wealthy people and companies, marking a significant shift that underlines the harsh business climate facing Wall Street since the financial crisis. Known for its aggressive trading and big corporate deal-making, Goldman Sachs is ramping up its activities to become a private bank to serve wealthy customers around the world. The new unit will also lend more directly to corporations, some of whom already make investments and do business with the firm. Executives have set a goal of $100 billion in loans, up from $12 billion at the end of March. While Goldman says its financial investment in expanding its bank is a modest one, its ambitions represent a huge change of focus among the managers of the 144-year-old firm. The new bank is a part of Goldman’s cautious strategy to reshape its business. But the modest income from interest on mortgages and other loans likely won’t come close to replacing the profits lost elsewhere. Read the full story on Goldman’s new private bank here; and read more about the firm’s second quarter report here.