Goldman Sachs hungry for acquisitions — but not for the targets you think

Yes – Goldman Sachs is on the prowl for acquisitions, and it isn’t alone on Wall Street – but they may not be the deals you’ve been reading about.

The speculation about Goldman buying Northern Trust (yes, I have been reporting it for years) is, at this point, likely nothing more than that, sources told On The Money. Northern Trust shares are up 20% on the chatter, but its CEO has been dismissive – and so are the people at Goldman, I am told.

For one, Goldman CEO David Solomon doesn’t like overpaying, which is exactly what he’d have to do at this point to get Northern Trust to sell. I’ve also been told Goldman’s culture is too weirdly unique for it to combine with another same-sized bank.

On that latter note: Solomon also isn’t looking to be the CEO who will cede control to a bigger player.

Other deals, however, will happen at Goldman and elsewhere in banking. That’s right: Wall Street is rife with high-level bank merger discussions. They may or may not lead to a transaction, but the talks have officially begun, people with direct knowledge of the matter said.

The reason is a lighter regulatory approach by the Federal Reserve prodded by the more deal-friendly Trump administration that will allow large to mid-sized banks – stymied for years by post-financial crisis guardrails – to expand.

True, you probably won’t see two large “systemically important” banks like Jamie Dimon’s JP Morgan buying up Goldman. But both JPMorgan and Goldman will be able to do significant, albeit smaller deals, my banking sources say.

“Because of the Fed’s supervisory relaxation big bank deals are going to happen,” said one financial-service chief executive who asked not to be named. “Everyone is talking.”

As I have reported, Solomon knows he needs to grow his smallish, but powerful investment house. Its market cap is $221 billion compared to more than $830 billion at JPMorgan. It could use heft and scale if it wants to remain relevant well into the future.

One possible target for Goldman: State Street Corp., a mid-sized bank with around $30 billion in market value. It’s digestible and it is strong where many of the bigger players would like to be, like custodian services and various types of investment services (A State Street spokesman had no immediate comment).

Another potential target for Goldman: the mid-sized BNY, formerly known as Bank of New York Mellon. Both companies have already announced a joint venture to offer “tokenized” money market funds, a precursor to a true merger later.

People close to Goldman tell me a more immediate deal could be in the private credit or non-bank lenders space. BlackRock dived head first into private credit, snapping up HPS Investment Partners in 2024. CEO Larry Fink sees private credit booming and will soon offer retail investors products where they can get such exposure in their 401(k)s.

A Goldman spokesman had no comment. A BNY rep declined comment.

Meanwhile, Citigroup, after years of turmoil following its near demise during the 2008 financial crisis, is ripe to do a deal. Finally, its balance sheet has improved enough to give the Fed some assurance it has the capital to digest dealmaking.  

CEO Jane Fraser is impressing investors with her turnaround of the nation’s third largest bank (based on assets) and she now has the resources to combine with possibly a European bank that could enhance Citi’s strong point, which has always been its international footprint. (A Citi rep also declined to comment.)

The giant Swiss bank UBS is also said to be on the prowl for US bank assets, On The Money has learned. This comes after its 2024 forced merger of the beleaguered Credit Suisse that Swiss banking regulators believed was needed to prevent a collapse of CS. “UBS is very aggressive to do a US deal to reduce its Swiss exposure,” my CEO source said.

A UBS rep had no immediate comment.

This is far from an exhaustive list and combos are all subject to change. But deal-making is in the air.