Report: Goldman Sachs Struggles as It Tries to Exit GM Card

Goldman Sachs this week reported losses related to its Main Street lending business.

The banking giant has been pulling away from the credit card lending space, a departure that a Tuesday (Sept. 10) report by The Wall Street Journal (WSJ) characterized as “messy,” driven by “lax underwriting standards.”

Goldman is facing an approximately $400 million pre-tax hit from the sale of its General Motors credit card business and a smaller, unrelated unit, the report said.

Goldman has been having discussions since the spring with Barclays about moving the GM card to the United Kingdom bank. However, Barclays has not been willing to pay Goldman the price initially expected, largely because of high charge-off rates associated with the program, per the report.

Goldman Sachs is likely to get less than the outstanding balances after having paid a premium to acquire them. The card partnership has about $2 billion in balances, the report said.

A spokesperson for Goldman declined to comment when reached by PYMNTS.

The “problematic” accounts were chiefly originated by Goldman after it took over the program from Capital One and began launching accounts in 2022, according to the report. Average charge-offs on the Goldman-originated accounts, which account for about a third of the GM portfolio, exceed 10%.

The annualized credit card charge-off rate of American commercial banks is 4.5%, the report said, citing Federal Reserve data.

Goldman struggled to expand its GM card base, in part because of the popularity of travel reward cards. It turned to third-party websites like Credit Karma to find new customers, which ended up attracting users with lower credit scores, per the report.

Goldman has a greater challenge ahead in exiting its card partnership with Apple, where balances come to approximately $17 billion, the report said.

As PYMNTS reported last month, Goldman “has been sharpening its focus on investments, banking and other activities more geared to the markets after selling its GreenSky platform and continuing its pivot away from Main Street banking.”

Goldman announced last year that it was selling its GreenSky consumer finance platform and the loans associated with it to a group of buyers led by global investment firm Sixth Street.