American banking giant Goldman Sachs is temporarily shutting down its Marcus savings account for new clients in the UK as deposits near regulatory limits amid the Covid-19 pandemic, Reuters has reported.
Since its launch in 2018, Marcus has attracted nearly £21bn ($27bn) in total deposits from over 500,000 savers.
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The digital bank recorded over £8bn in deposits from 100,000 new customers since January alone, of which, it collected $4bn since the lockdown began on 23 March 2020.
Moreover, a report published last month by New Policy Institute (NPI), the country’s policy think-tank, revealed that households in Britain slashed their spending by £57bn since the lockdown commenced.
This indicates that a significant portion of household income is being saved by the people in the UK.
Marcus UK head Des McDaid said: “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.”
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By GlobalDataThe regulatory limit for retail deposits is capped at £25bn. The UK banking rules demand ring-fencing of deposits totalling more than this amount, the report added.
However, Marcus has to become a separate legal entity for ring-fencing. It must have its own board and limit the capital being shared with the other Goldman Sachs businesses.
Marcus has provided Goldman Sachs billions of dollars of deposit-based funding to utilise for its investment banking activities and helped it diversify into the consumer banking business.
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.”
Marcus is open for business in the US, where it has recorded over $50bn in total deposits in Q1.
