Morgan Stanley and Goldman Sachs to drop bank status?

12 October 2011

Morgan Stanley and Goldman Sachs Group could be about to drop their status of bank holding companies.

This is the suggestion of David Hilder, analyst at Susquehanna Financial Group, who noted the organisations might take such action into account in an effort to avoid any expenses associated with the Volcker rule, Bloomberg reports.

The industry figure observed that the two firms will consider their positions because the arrangement would serve to force capital to non-bank market makers and add extra costs on lenders.

Mr Hilder explained: "The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that and not proprietary trading in disguise."

Goldman Sachs and Morgan Stanley - which has been in operation as a financial advisor to governments, investors and companies since 1935 - are likely to give thought to their status if the regulations are imposed in anything close to their proposed form.

By Tony Aynsley

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