Goldman Sachs To Call It Quits With GM Credit Card Program?

In a move that reflects a broader reassessment of its consumer lending efforts, Goldman Sachs Group Inc. GS is preparing to offload its General Motors GM credit card program. The sale process is expected to be supervised by General Motors itself.

What Happened: Goldman Sachs’ move was announced internally on Tuesday, according to people familiar with the situation, The Wall Street Journal reported.

The bank informed employees within its Platform Solutions division, which handles the GM card, about the upcoming search for a new issuer. The process is anticipated to be led by General Motors.

The GM credit card program targets General Motors vehicle purchasers and owners. Goldman Sachs is also the issuer behind the larger Apple Inc. AAPL credit card. Efforts by Goldman to reduce costs in its card programs failed to meet targets, prompting the decision to explore a sale.

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Goldman Sachs has been in discussions with American Express regarding interest in the Apple card program and possibly the GM card program. However, it’s uncertain if American Express will engage in the sales process. Goldman started issuing GM credit cards early last year with high hopes of transforming cars into e-commerce platforms, which has not fully materialized.

Exiting the credit card business represents one of the final steps in Goldman Sachs’s downsizing of its consumer-lending division, following the sale of specialty lender GreenSky and most of the personal loan portfolio. Goldman Sachs will operate the GM credit card program until a new issuer takes over. Employees affected by the divestiture have been promised compensation equivalent to a year’s salary if they lose their jobs.

Why It Matters: Goldman Sachs’s move to divest the GM credit card program comes on the heels of reports earlier this month hinting at a potential exit from its partnership with Apple. As reported on July 1 by Benzinga, the financial services giant was in talks to hand over the Apple credit card and other joint ventures to American Express AXP.

This indicated a significant shift in strategy for Goldman, which had only recently bolstered its collaboration with Apple by offering a high-yield savings account for Apple card users and introducing “Apple Pay Later” services in the U.S.

The decision to sell these consumer-facing credit card operations aligns with Goldman’s broader initiative to pare down less profitable segments and refocus on its core competencies.

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