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Goldman Sachs expands in UK despite Brexit warnings

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Goldman Sachs
Goldman Sachs

Goldman Sachs has unveiled plans to expand further in Britain years after it warned a difficult Brexit would negatively affect its investment in the UK.

The Wall Street giant is now launching a UK transaction bank, which provides companies with day-to-day treasury operations such as payment processing and payroll, a year after it set up the division in the US.

The bank, which has been pushing to diversify away from its core investment banking business, said its transaction arm in America already had more than 250 clients, had taken more than $35bn (£25bn) in deposits and had processed trillions of dollars through its systems.

Its latest plans come as America's biggest banks race to expand in Britain, threatening to take more market share from UK lenders, such as HSBC and Barclays, and piling further pressure onto loss-making fintech start-ups.

Goldman began targeting UK households in 2018 by launching its savings bank Marcus, which signed up 50,000 customers in its first fortnight.

Its arch-rival JP Morgan is also preparing to launch its own digital bank in the UK. Last week it bought British robo-adviser Nutmeg as it seeks to break the dominance of Lloyds, NatWest, Barclays and HSBC.

Both banks have expanded in the UK in recent years despite warnings from their bosses that a hard Brexit would damage their investment in the UK.

Goldman chief executive David Solomon said in early 2019 that if Brexit was resolved in a difficult way, "it'll have an impact on where we invest in where we put people".

His predecessor Lloyd Blankfein had also said that the bank might not have chosen to build its new £1bn EU hub in London had it known about Brexit.

Speaking in 2018, he said that while its EU headquarters would remain in London "we might have made a different decision a few years ago".

JP Morgan's long-standing chief Jamie Dimon warned only a few months ago that Brexit "cannot possibly" boost the UK economy, and warned of mass job moves as Brussels seeks to exclude London from its markets.

Mr Dimon - a vocal backer of Remain before the referendum - suggested that the UK would in future be forced to follow the EU's agenda.

"Brexit was accomplished, but many issues still need to be negotiated. And in those negotiations, Europe has had, and will continue to have, the upper hand," he said in his annual letter to shareholders. "In the short run (ie. the next few years), this cannot possibly be a positive for the UK's GDP."