Goldman hunts new revenues in EU transaction banking push

Goldman Sachs is rolling out its transaction banking services to the EU with a new team based in Frankfurt, as it continues to diversify beyond its trading and advice services.

Since launching the business — which specializes 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 $65bn in deposits.

Jim Esposito, co-head of Goldman’s investment bank, told the Financial Times that the bank was also considering opening transaction banking offices in Amsterdam and Japan in the near term as it bids to gain market share from leaders such as JPMorgan and Citigroup.

“We need to get various banking licenses and regulatory approvals,” he said. “But we’re doing this with intent, in a very purposeful fashion, to get 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 grow beyond the investment bank’s core areas of trading and advisory, where it is a market leader, and into business lines that provide stable and recurring revenue streams.

The group’s transaction banking platform, known as TxB, offers services such as cash management and treasury to businesses. Esposito said the vast majority of the clients it had picked up were already customers of the bank.

“This is a perfect case study for what David wanted to see from Goldman Sachs,” Esposito said. “It fits like a tight glove. This is new growth, with sticky, durable and recurring revenues.”

The global expansion is part of a push to offer deposit and payment services to clients in more than 160 countries and 120 currencies.

The expansion comes as Goldman is in the process of restarting its annual cull of underperforming bankers, which is expected to lead to the dismissal of hundreds of employees in the coming weeks.

The process — which was paused during the height of the coronavirus pandemic as banks struggled to keep up with the workload — typically results in between 1 and 5 per cent of company-wide employees losing their jobs, with the impending review set to result in dismissals towards the lower end of that range.

The planned dismissals are indicative of broader concerns in finance of job cuts amid a drop-off in dealmaking activity and a slowdown in economic growth in the US and Europe.

At the end of June, Goldman had about 47,000 employees across investment banking, trading, asset and wealth management, consumer banking and operational functions.

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