Goldman seeks deposit growth, wary of bank deals

NEW YORK (Reuters) - Goldman Sachs Group Inc wants to expand deposits by as much as fivefold in the next year, but the newly minted bank holding company remains wary of buying institutions that bring other troubles with them, Chief Financial Officer David Viniar said on Tuesday.

Viniar told reporters he expects Goldman will expand its $20 billion deposit base to between $50 billion and $100 billion over the next year. Growth will be fueled through a combination of deposit brokers, Goldman's private wealth managers and "other sources," including acquisitions.

While there has been speculation that Goldman would pursue deals with Citigroup and other U.S. banks, Viniar said the firm is proceeding cautiously. But he did not rule out a deal.

"We're not going to make an acquisition just to grow our deposit base. And we have to be very careful about not making an acquisition of deposits that have troubled assets which come with them," Viniar told reporters in a briefing after Goldman reported a fourth-quarter loss of $2.12 billion, its first loss since going public nine years ago.

"That is a potential way of growing that business. We will look at opportunities if they make sense, but so far we haven't seen anything that makes sense," he said.

Goldman converted from an investment bank to a Federal Reserve-regulated bank holding company in September as investors and customers lost confidence in the lightly regulated, highly leveraged broker-dealer model favored by Wall Street firms.

The shift, made reluctantly only after Lehman Brothers collapsed into bankruptcy, gave Goldman permanent access to Fed funding and allows it to attract deposits, reducing its reliance on short-term debt markets.

To date, Goldman's bank has about $150 billion in assets, funded in part by more than $20 billion in U.S. deposits.

"We've been growing those slowly, internally, through third party channels. We are looking to grow deposits within the bank, not because it is a be-all-end-all, but a good diversified source of funding," Viniar said.

By comparison, Goldman rival Morgan Stanley, which has undergone the same conversion to a bank holding company, has been more enthusiastic about the potential for building a significant banking business. Morgan is already one of the world's largest brokerages for individual investors, and it recently hired senior Wachovia Corp executives to help create a major retail bank.

Viniar said Goldman, which generally does business with institutions and companies, intends to steer clear of consumer banking.

"The strategy is evolving, but as we sit here now, we're much more of a wholesale than a retail company. We always have been," he said.

Viniar, though, asked for patience.

"You have to give us a little more time," he said. "We were an investment bank for 139 years and a bank holding company for three months. We're still a little new at this game."

(Editing by John Wallace)