As Goldman Sachs exits GM deal, Barclays hopes to benefit

Bloomberg

Goldman Sachs has taken another step toward unwinding its ill-fated consumer banking foray by reaching a deal to sell its General Motors credit card portfolio to Barclays.

During the third quarter, the negative effects of the four-year-old GM deal cut into what was largely a strong financial performance for Goldman.

In quarterly results announced Thursday, Goldman recorded a $415 million charge that was partly connected to the GM credit card portfolio. It also wrote down certain intangibles related to the GM program.

Goldman Chief Financial Officer Denis Coleman told analysts that the Wall Street giant expects the sale of the GM portfolio to close in the third quarter of 2025.

"We obviously have responsibility for operating the platform until that point in time," Coleman said, adding that the company estimates it will incur quarterly operating losses of $50 million to $60 million until the deal closes.

Goldman did not say who is buying the GM card portfolio, but Barclays confirmed Tuesday that it's the purchaser. One day earlier, the British bank announced that it has entered into a long-term card partnership with GM. Goldman had reportedly beaten out Barclays for the GM deal back in 2020.

Earlier this year, Barclays announced a strategy to grow and diversify its U.S. credit card business, which has been weighted heavily toward co-brand relationships in the travel sector. The GM partnership will help the British bank to accomplish those goals, Doug Villone, head of Barclays' U.S. cards and partnership business, said.

"We want to be the premier co-brand partner of choice for America's best brands," Villone said in an interview Tuesday.

The sale of the GM portfolio is just the latest step in Goldman's retreat from the consumer banking business, which the company entered during the mid-2010s.

Goldman has stopped offering personal loans under the Marcus brand, and it has sold the GreenSky home improvement loan platform. More recently, Goldman has reportedly been in talks with JPMorgan Chase to take over the Apple card program, though Goldman CEO David Solomon did not provide an update Tuesday on his firm's plans with respect to the iPhone maker's credit card.

Last month, Solomon previewed the $415 million charge that the company announced Thursday, saying during a conference appearance that Goldman was expecting to take approximately a $400 million hit from the transition of the GM card platform and the sale of seller financing loans.

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During the third quarter, Goldman reported net earnings of $2.99 billion, up from $2.06 billion in the same period last year, but down slightly from the $3.04 billion it reported in the second quarter of 2024.

The results got a boost from an 18% year-over-year increase in net revenues in the company's equities business. Investment banking fees were 20% higher than in the same period a year earlier.

In addition, Goldman benefited from positive trends in asset and wealth management, David Fanger, senior vice president in the financial institutions group at Moody's Ratings, said in an email. Net revenues in the segment were up 16% from the third quarter of 2023.

"The firm also made further progress on its exit from consumer lending, which we expect will reduce the earnings drag from that business," Fanger said.