Goldman to buy GE bank's $16-bn of deposits

US investment banking giant Goldman Sachs Group Inc (GS) will buy GE Capital Bank's online deposits worth $16 billion, to improve the bank's funding diversification and strengthen liquidity.

The cash assets to be acquired include about $8 billion in online savings accounts and $8 billion in brokered certificates of deposit and also the software technology used to operate the online banking site. The deal does not include the purchase of any of GE's physical assets, according to a company release.

GE Capital is a wholly-owned subsidiary of Connecticut-based US multinational conglomerate General Electric Co (GE).

The Goldman group's treasurer Liz Beshel Robinson said, ''This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel.

''The establishment of this channel represents the advancement of a key funding objective for the firm,'' Robinson added.

GE bank's president Scotts Roberts said,  ''We are pleased to transition our depositor relationships to GS Bank, a large, stable institution with a focus on customer service.''

Roberts is expected to join the GS Bank to oversee the online platform.

''I am personally excited at the prospect of joining GS Bank, along with my team, to work towards a seamless transition of depositor accounts and to assist in managing the platform going forward,'' he said. 

Closing of the transaction is subject to regulatory approval, Goldman said.

Under the deal, Goldman Sachs Bank will offer employment to most of GE bank's employees working in the online platform.

Earlier this year, GE announced plans to divest bulk of its banking operations to simplify its business and focus on its core operations. It has already has reached deals to offload $23 billion of financial assets during April-June and has been continuing the selling spree.

Two days ago, the company agreed to sell its healthcare finance unit for $9 billion (Capital One to buy GE Healthcare Finance for $9 bn).

GE Capital chairman and CEO Keith Sherin said, "As we work to reduce the size and complexity of GE Capital, this transaction is another key step. It advances GE Capital's new strategic direction by facilitating closure of one of our two US bank charters, which we believe will help us become less systemically important."

GS Bank is a subsidiary of New York headquartered Goldman Sachs Group, a leading global financial services firm. The bank had deposits of around $89 billion as at the end of June 2015.

This is Goldman's second purchase in a month's time.

Last month, Goldman's asset management arm acquired a leading institutional impact investing firm Imprint Capital to strengthen its ability to deliver environmental, social and effective governance and impact investment opportunities to special clients.