Goldman Sachs recently got approval from the Federal Reserve Bank to acquire certain assets from GE Capital Bank, which means that GS will assume approximately $17 billion of GE Capital’s $18.2 billion in deposits. The reasoning behind the acquisition stems from the quality of client deposit assets, which are considered stable sources of financing asset purchases. As such, the bank will have higher quality assets to work with, but it’s not yet clear if this makes any meaningful difference to the firm’s total consolidated assets of $859.9 billion, which mostly stems from its asset management and institutional brokerage (client execution). However, Goldman Sachs’ client deposits amount to $78.1 billion, which is relatively small when compared to peers. Companies like JPMorgan have been able to grow deposits organically at an 8% CAGR over the past five-years, so it’s not surprising that GS would pursue an acquisition to sustain deposit growth given its limited exposure to consumer banking. The bank will now have $95.1 billion in assets, which makes it slightly bigger and better positioned to compete in the consumer space. However, there are limitations to Goldman’s strategy as they have acquired an online banking subsidiary of GE Capital Bank. Admittedly, Goldman’s consumer banking segment has impressive deposit balances, but its branch network is quite limited. In fact, the features are sort of inferior to some of the other competing banks that are geared to the mass market, so it’s kind of surprising that GS even had $78.1 billion in assets to begin with. Following the acquisition, Goldman Sachs non-existent branch network will remain non-existent, but it will at least open online banking channels. In the acquisition it was noted that GS will acquired intellectual property and according to the Federal Reserve, “GS Bank will acquire certain technology and intangible assets used by GE Capital Bank to manage its online retail deposit-taking platform; these assets represent approximately 1 percent of the total assets of GE Capital Bank.” The acquisition provides the necessary infrastructure for Goldman Sachs to make a push into consumer banking, but I guess one is left wondering – for Goldman Sachs, catering to main street consumers has never been its forte, so how are they going to re-brand as a consumer friendly bank?