Goldman Sachs (NYSE:GS) has initiated the process of finding a new issuer for its General Motors (NYSE:GM) credit card, a step further in its ongoing retreat from retail banking, according to reports on Tuesday, November 7, 2023. The GM credit card was launched less than two years ago as part of Goldman Sachs' consumer lending venture, targeting GM vehicle owners.
This move comes after the bank sold its personal finance unit to Creative Planning in August 2023 and specialty lender GreenSky to Sixth Street Partners and other firms in early October. The sale of GreenSky followed a 33% fall in third-quarter profits from last year, largely due to a Greensky (NASDAQ:GSKY) write-down that reduced pre-tax profits by nearly $1 billion.
In addition to the GM credit card, Goldman Sachs is also considering exiting the credit card business it launched with Apple (NASDAQ:AAPL) in 2019. Talks have been held with American Express (NYSE:NYSE:AXP) about potentially taking over both these programs. CEO David Solomon stated on the third-quarter earnings call that Goldman Sachs does not have the unilateral right to exit these long-term contracts but emphasized on managing them better for drag reduction and profitability progress.
The retreat from consumer business began under Solomon's leadership. In October 2020, Goldman Sachs' Platform Solutions division outbid Barclays to acquire the GM credit card business from Capital One for $2.5 billion. The bank also acquired fintech lender and 'Buy Now, Pay Later' (BNPL) provider GreenSky in 2021 for $2.24 billion, only to sell it two years later.
These strategic shifts come as Goldman Sachs grapples with a slump in the dealmaking market while trying to streamline operations and improve profitability.
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