Goldman eyes local banking licence to grow ultrarich lending business



Goldman Sachs is considering applying for a local banking license to extend a broader suite of lending products to its ultra-high net worth clients in Australia, the bank’s co-head of global private wealth management, John Mallory, says.

The Wall Street investment banking giant’s local private wealth team currently includes some 13 advisers in Sydney and Melbourne. In an interview, Mr Mallory said there were “limits on what we can do from a lending perspective today”.

“We’re looking to build [lending] out further because in other parts of the world where we do have those licenses, that’s an important part of our value proposition, but it’s not something we’ve been doing here just yet,” he said.

Asked whether Goldman would apply to Australian regulators for a license, Mr. Mallory replied: “We’d consider it”. Wealthy people typically take out loans against their shares and properties to free up money for other investments, which is sometimes called Lombard lending and can be a profitable business for private banks.

Goldman has previously signaled its bullishness on catering to Australia’s rich. Simon Rothery, chief executive at Goldman Sachs Australia, told The Australian Financial Review in July that the market represented the “biggest opportunity in private wealth in Asia” and said he wanted to double the number of advisers in its local private banking arm.

Goldman Sachs defined the ultra-high net worth space as families with more than $US30 million ($47 million) of investible assets, a market where wealth preservation was often at a premium to wealth generation.

“We’re going to try to focus really on the largest families here in Australia, that feels more like an institutional kind of business coverage model,” Mr. Mallory, who shares the role with Meena Flynn, said. “Those folks are looking for help on a global basis in terms of their needs and requirements. And we’re going to be here for the long haul for sure.”

But the space is increasingly crowded. Several investment banks have in the past year taken steps to focus on the top end of the high net wealth market.

Morgan Stanley has shifted its offering to focus on accounts of more than $1 million, attempting to move other clients to Ord Minnett. HSBC is relocating private bankers from Singapore to Australia. Two senior bankers formerly at Credit Suisse and HSBC, establishing a new private bank, Volans, targeting ultrarich families. LGT Crestone is also expanding its lending offerings to cater to prospective wealthy clients.

Mr Mallory said he was buoyed by the increased competition. “The fact that others are trying to operate in that space or try to make inroads in that space here, frankly to me is almost more than just a validation of how much opportunity there is in that space,” he said.

“We feel like we’re differentiated in as opposed to … building a large retail operation, you know, on the ground in various countries around the world, which is what some of our other competitors have been doing.”

Mr Mallory said wealthy families were most interested in investing in the United States and Europe. “The US equity market on the public side as still being probably the best single place to invest to be able to outpace inflation over a long period of time,” he said, adding that with the prospect of rate cuts looming, “a lot of our clients will start to extend the duration of their fixed income portfolios”.

The wealthiest families were also now more concerned about the risk of conflict in the Middle East rather than recession, he added. “It feels as if [the risk of recession has] moved to the back burner relative to the geopolitical risk that people are most concerned about, which is not to say the recession risk is totally off the table.”



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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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