Goldman Sachs Considers Launching Online Bank

December 3, 2008 11:58 a.m. EST

New York, NY (AHN) - According to recent reports, Goldman Sachs is contemplating whether to open an online banking division as it makes moves to expand its banking operations since becoming a bank holding company.

The company would be able to raise deposits through an online unit, thus funding business lending activities.

Goldman has about $20 billion in deposits held by its subsidiaries. An online unit would help increase that number through the use of products like certificates of deposits (CDs).

The move would certainly be a change of image for Goldman, known as a company of prestige and high-wealth clients. Online banking would open up the firm to the everyday Joe.

Goldman Sachs received approval for a bank charter in New York State shortly after Lehman Bros. went under. By switching to a bank holding company Goldman also gained the right to access the Fed lending window for short-term liquidity.

Elsewhere, it is believed Goldman will name Gerald Corrigan as chairman of its banking division, Goldman Sachs Bank USA. Corrigan is a former president of the New York Federal Reserve Bank.

Goldman declined to comment on both matters, according to a Reuters report.

Shares of Goldman Sachs are 5 percent higher to $68.27 in Wednesday morning trading.