Zinger Key Points
- The banking giant has reportedly sold a significant part of its personal loans portfolio and is looking to offload GreenSky at a big loss.
- Goldman Sachs' shift from consumer lending comes just four years after its strategic entry into the credit card space
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Goldman Sachs Group Inc. GS is seemingly reversing its stance on consumer lending, contemplating the sale of certain portions of its portfolio, which includes the Apple credit card and other Apple Inc AAPL products, along with the General Motors credit card.
What Happened: As reported by The Wall Street Journal, the banking giant is offloading specialty lender GreenSky at a substantial loss, merely a year post-acquisition.
Reportedly, a significant portion of its personal loan portfolio has already been sold.
Goldman’s partners and senior executives are believed to think that the consumer lending operations have provoked more complications than worth, leading to billions in losses and attracting regulatory attention.
"We should have never done this f***ing thing," a Goldman partner reportedly said during a town hall at its headquarters this April.
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Though a final verdict hasn’t been reached, inside sources reveal that Goldman has been in talks with American Express Company AXP. However, the potential shift of consumer products to Amex remains unsure due to the Apple credit card’s loss rates and other factors.
CEO David Solomon is anticipated to reassure investors in the upcoming earnings report about the bank refocusing on its core Wall Street operations.
Why It Matters: Goldman Sachs’ strategic reversal comes after its entry into the credit card space in 2019, which raised apprehensions among consumer banks about the emergence of a new contender.
Goldman had partnered with Apple for a high-yielding savings account for Apple card users and a Pay Later service in the U.S. However, just four years later, the banking giant is retreating, indicating a potential end to their experiment with consumer lending.
This decision also follows the shelving of a project to introduce a stock trading feature for iPhone users, a financial service that was almost delivered by Apple and Goldman Sachs.
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