Goldman Sachs stops new customers opening Marcus saving accounts following surge in demand

Goldman Sachs has stopped new customers from opening Marcus savings accounts following a surge in demand.

The move will only affect customers in the UK and comes after the coronavirus lockdown prompted billions of pounds of new deposits as investors fled to the safety of cash, meaning the bank was edging closer and closer to regulatory limits.

Since its inception in 2018, Marcus has enticed over 500,000 customers to deposit more than £21bn in its saving accounts.

British banking regulations require companies with deposits of more than £25bn to become a separate entity from its parent company, called ring-fencing.

Under ring-fencing regulations, Marcus by Goldman would have to become a separate legal entity from Goldman Sachs, meaning the amount of capital the two companies could share would be limited.

Des McDaid, managing director of Marcus by Goldman Sachs, told Reuters: “We’ve really seen our growth accelerate under lockdown as people hold off on discretionary spending and take time to reorganise their finances and get the best deal for their money.”

In a statement issued to users, McDaid wrote: "Implementing the ring-fence and separating Marcus financially, operationally and organisationally from the rest of Goldman Sachs would be a significant change to our low-cost business model that allows us to pay consistently competitive rates to our existing easy access savers."

"At the moment, it’s not in our business plan to implement a ring-fence. This means that we need to monitor our growth carefully in the context of the ring-fencing threshold."

Following the outbreak of coronavirus, the easy access saving account’s interest rate has been slashed twice.

The first drop came in mid-April when the interest rate fell from 1.3 per cent to 1.2 per cent, in direct response to the Bank of England slashing the base rate.

Just shy of a month after the first cut, Marcus slashed its interest rate again from 1.2 per cent down to just 1.05 per cent amid the coronavirus-related market turmoil.

Update 10-06-2020 - This article was amended to better reflect Marcus by Goldman's attitude towards ring-fencing and to include an updated quote from managing director, Des McDaid.