Goldman Sachs has rolled out the Goldman Sachs Private Bank Select, a new digital lending solution that provides financial advisors at third-party broker-dealers, registered investment advisors (RIAs) and asset custodians the ability to offer securities based loans (SBLs) to their clients.

GS Select is an expansion of the firm's existing Private Bank business in private wealth management (PWM), which uses a digital platform to extend the lending services customarily reserved for PWM clients to non-PWM clients. GS Select loans are offered through GS Bank USA.

The new service expands lending into the 'large and growing' independent advisor market which is already served by Goldman Sachs Asset Management through its third party distribution (TPD) business.

According to the US bank, the program is a 'quick, simple and convenient' way for investors to borrow up to US$25m against securities held in investment accounts at the firms that Goldman Sachs partners with for this lending program.

'GS Select is a securities-based lending solution that uses diversified, non-retirement investment assets in a client's pledged account as collateral,' stated the US bank. 'Our digital platform allows you to quickly and seamlessly establish a revolving line of credit for your clients, providing easy access to liquidity. And our high-touch servicing ensures easy management of your clients' loans.'

The revolving line of credit offered by GS Select means that clients can borrow, repay, and re-borrow multiple times. The non-retirement investment assets used as collateral include stocks, bonds, mutual funds, and exchange-traded funds (ETFs) while repayment will be subject to a 1-month Libor plus a spread determined by loan amount, which is reset monthly. There is no maturity date to repay the loan's principal which can be repaid at any time without penalty.

Goldman has established a strategic relationship with Fidelity Clearing & Custody Solutions, offering RIAs and broker-dealers that clear on Fidelity's custody and trading platform the ability to provide loans to eligible clients.

The bank also said that private wealth management businesses without bank affiliates are the primary institutions that GS Select aims to work with for this program and that additional relationships with other third-party broker-dealers, asset custodians and RIAs are expected to be announced over the coming months.

Goldman has been expanding its activities beyond its core investment banking business aimed at high-net worth clients over the last few years, and making inroads into the retail market. In November 2016 the bank launched its Structured Investment Marketplace and Online (Simon) platform, a single-issuer platform where financial advisers can enter different product criteria (term, underlying assets, pay-off) to create structured notes with Goldman providing quotes and pricing on the structures designed.

SRP understands that since it opened its gates to the wider market in Q4 2016 a number of issuers such as TD Bank and Wells Fargo have signed up to sell structured notes via this web application while a number of broker-dealers and distributors including Raymond James, CIBC and LPL Financial Holdings have used the platform to design and issue their own offerings.

However, the number of issuing banks adopting Simon to issue products has been limited and Goldman Sachs is now 'seeking to sell a stake in Simon' and 'is soliciting investments that would value Simon at about $75 million and lay the groundwork for a spinoff of the business', according to a report by the Wall Street Journal (WSJ) earlier in July.

SRP understands that Simon has more than 18 brokerage firms signed onto the platform representing client assets of roughly US$2tr.

Goldman Sachs was the sixth most active issuer of structured products globally in 2016 including non-retail, leverage and flow with over 130,800 products across jurisdictions worth an estimated US$9.5bn, according to SRP data. The US bank was the third most active issuer of structured notes in the US market with over 1,500 marketed in the retail market worth US$7.1bn. Year to date, Goldman Sachs has marketed over 1,100 products and is leading the sales ranking with over US$5bn.

A Goldman Sachs spokesperson declined to comment on the WSJ report regarding the Simon platform's spinoff.

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