Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Fed Approves Goldman's $17 Billion GE Capital Bank Online Deposits Buy

By Eric Volkman – Mar 24, 2016 at 5:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The financial services group's Goldman Sachs Bank will absorb the new assets.

What happened?
The dismantling of General Electric's (GE -1.63%) once-mighty GE Capital financial services unit continues. The Federal Reserve has granted approval to Goldman Sachs (GS -1.43%) to buy GE Capital's online bank deposits, which total roughly $17 billion. The deal was originally agreed to last August; the terms of the purchase remain undisclosed.

Image source: Publicdomainpictures via Pixabay. 

The deposits will be absorbed by Goldman Sachs unit Goldman Sachs Bank. With them, Goldman Sachs Bank will hold approximately $95 billion in total deposits.

The Fed's approval of the sale is the latest development in General Electric's attempts to dismantle GE Capital. The company undertook this last April because of stricter regulations for what the Fed deems "systemically important" financial institutions.

The Fed's nod is the key approval needed to cement the deal. It is still, however, subject to approval from New York and Utah state regulators.

Does it matter?
Considering the entirety of the Goldman Sachs financial juggernaut, the GE Capital buy is a drop in the bucket -- at the end of last year, the company had a whale-like $861 billion in total assets.

Still, it's always encouraging when a bank widens its asset base, particularly when it scores a good deal in the process (we can assume this was the case, given the fire-sale nature of General Electric's divestment, and Goldman Sachs' strong deal-making abilities).

Some General Electric shareholders will be sorry to see the formerly powerful -- and very profitable -- GE Capital continue to melt away. But the company feels it's time to get out of the finance game, and shareholders should welcome this news as a sign it's moving right along with that process.

Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of General Electric. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Goldman Sachs Stock Quote
Goldman Sachs
GS
$383.29 (-1.43%) $-5.57
General Electric Stock Quote
General Electric
GE
$86.70 (-1.63%) $-1.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.