December 03, 2008

In the latest evidence of how Wall Street is seeking to broaden its sources of funds, Goldman Sachs Group Inc. is weighing whether to launch an Internet banking operation, according to people familiar with the situation.If Goldman goes ahead, the new unit will seek deposits that can be used to fund various businesses now that Goldman is a bank-holding company. The possible online bank hasn't been named yet, and many details of its operating plans are undecided. It is likely to offer a range of savings products, such as certificates of deposit, people familiar with the matter said.The New York company already has about $20 billion in deposits, which are held by its bank subsidiaries. Attracting even more deposits, typically a low-margin business, will give Goldman a more-stable funding base amid tumultuous market conditions.The Internet push would be a small but important part of the firm's emerging strategy as it tries to find its way on the new Wall Street.

While still better off than most of its rivals, Goldman is expected to post a net loss of about $2 billion when it reports fiscal fourth-quarter results later this month. That would be the firm's first quarterly loss since going public in 1999.In addition to an Internet bank, Goldman executives are weighing the possibility of seeking deposits through the firm's vast wealth-management operation and from large corporate clients. Such corporate and institutional deposits are closer to the core of Goldman's overall banking strategy than retail deposits.But with the future looking so uncertain, building a viable online banking business fits with Goldman's wider push to diversify itself, even though it will be jarring for some analysts, investors and Goldman employees to see a firm known for trading and deal-making pitch bank products and interest rates directly to consumers.