Goldman Sachs closed its easy-access savings account to new customers in Britain on Wednesday after saving surged due to the pandemic, leaving the US bank on the cusp of breaching industry rules.
The bank’s UK digital brand Marcus has attracted about £21bn from more than 500,000 savers since its launch in 2018.
It launched offering a rate of 1.5%, taking it to the top of the interest rate tables, where it has largely remained since, despite four cuts bringing the rate down to 1.05% by 30 May.
However, UK banking rules mean that retail deposits of more than £25bn must be ring-fenced, which led Goldman Sachs managers in the UK to close the account as it neared that threshold.
Account closure to remain inside UK ring-fencing rules
“We’ve really seen our growth accelerate under lockdown as people hold off on discretionary spending and take time to reorganise their finances and get the best deal for their money,” Des McDaid, head of Marcus UK, told Reuters.
A move to ring-fencing would require Marcus in Britain to become a separate legal entity and limit how much cash it could share with the rest of Goldman’s risker trading operations.
McDaid added: “Separating Marcus financially and operationally from Goldman Sachs would be a significant change to our low-cost business model, which allows us to pay consistently competitive rates to existing savers.”
Analysis last month by the New Policy Institute think tank estimated that UK households have cut their spending by £57bn since lockdown began on 23 March.
Marcus said it had received inflows of more than £8bn from around 100,000 new account holders since January, and £4bn since the stay-at-homes measured were imposed in the UK.
Marcus product withdrawal ‘disastrous’ move for savers
McDaid said Goldman remained committed to the retail savings market in the UK and planned to launch an app and tax-efficient Individual Savings Account later this year, adding that its 12-month fixed-rate account is still open to new savers.
Money experts say the brand, named after Marcus Goldman who co-founded of the Wall Street investment bank in 1869, has offered a much higher savings product to many other low interest rate offerings in the UK market.
Rachel Springall, finance expert at investment website Moneyfacts.co.uk, said: “This is disastrous news for suffering savers who are already facing an onslaught of rate cuts across the market. Savers need to act fast to snap up the best rates, as not only are cuts occurring, lucrative offers are being pulled too.
She added: “The average easy access rate on the market has dropped to a record low of 0.30% and may well fall further in the weeks to come.”
Marcus, first launched in the US in 2016, has helped Goldman to diversify into consumer banking and provided billions of dollars of cheaper deposit-based funding to fuel its investment banking.
Marcus remains open for new accounts in the US, where total deposits in the first quarter lifted by $8bn to $50bn, compared to the previous three months.
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