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Goldmans and Morgan Stanley get retail finance approval

America’s two remaining investment banks are moving into the retail finance arena.

Morgan Stanley and Goldman Sachs have both been authorised by the Federal Reserve as Bank Holding Companies.

This mean they will be regulated by the Fed and able to take savings and deposits business to bolster their existing businesses.

Both banks have existing deposit customers but this will formalise their retail positions and allow them to expand further into the retail sector while giving them access to additional financing and flexibility should they want to acquire another retail bank .

John Mack, chairman and chief executive officer of Morgan Stanley, says: “This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position – with the stability and flexibility to seize opportunities in the rapidly changing financial marketplace.

“It also offers the marketplace certainty about the strength of our financial position and our access to funding. We remain intensely focused on continuing to provide world-class service and advice to our clients and deliver long-term value to our shareholders.”

Lloyd Blankfein, chairman and chief executive officer of Goldmans, says: “When Goldmans was a private partnership, we made the decision to become a public company, recognizing the need for permanent capital to meet the demands of scale.

“While accelerated by market sentiment, our decision to be regulated by the Federal Reserve is based on the recognition that such regulation provides its members with full prudential supervision and access to permanent liquidity and funding.

“We believe that Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources.”

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