Goldman Sachs Expands Client Base, Seeks South Africa License

In an effort to cope with a slump in revenues, Goldman Sachs (NYSE:GS) is trying to expand its client base by selling more of its core banking products. The investment bank said in a statement that it is seeking a South Africa banking license, which will allow it to offer more fixed income products in the country.

The company has already been providing advisory and wealth management services in South Africa over the past 20 years. Now, it wants to further expand operations in the region and plans on offering fixed income products, including foreign exchange and government securities, to corporate and institutional investors there.

While some other banks like Credit Suisse (SIX:CSGN) Group AG (NYSE:CS) and Barclays PLC (NYSE:CS) have almost ended their businesses in Africa, following the country’s first recession since 2009, Goldman Sachs still sees tremendous opportunity in the region and hence wants to tap into fast economic growth on the continent.

Colin Coleman, the CEO of Goldman Sachs’ sub-Saharan Africa region stated, “The long-term economic potential of South Africa is unquestionable.”

Notably, the expansion plan comes after South Africa’s president recently tried to convince people by stating that he would reignite economic growth, streamline cabinet and end corruption in the country.

As part of the expansion, Goldman Sachs is also entering into an agreement with Investec for equity trading. This combination will allow both the firms to extend their trading operations in South Africa and deepen links with Africa and international institutional clients.

Per reports, the bank also applied for a Japanese banking license so as to offer corporate cash management services.

Notably, within traditional banking, a diversified product portfolio has better chances of sustaining growth than many other banks, which have exited some of these areas. Goldman Sachs has been undertaking initiatives to boost the GS Bank’s business with its acquisition of the online deposit platform of GE Capital Bank in April 2016. It also launched a digital consumer lending platform — Marcus by Goldman Sachs. These efforts are likely to aid growth in the future.

Shares of Goldman Sachs have lost 17.8% over the past year compared with 22.7% decline of the industry it belongs to.

Currently, the stock carries a Zacks Rank #3 (Hold).

A better-ranked stock from the same space is Stifel Financial Corporation (NYSE:SF) . Over the past 60 days, it has been witnessing upward estimate revisions for 2019 earnings. The company’s shares have gained 15.5% over the past six months. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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