(Bloomberg) -- Goldman Sachs Group Inc. is set to hand off a $2 billion portfolio of loans made to General Motors Co. customers after its foray into the credit-card business ended up a costly whiff.
The Wall Street giant is poised to sell the portfolio of loans to Barclays Plc at a discount to the value of the outstanding balances, according to a person with knowledge of the matter, who asked not to be identified because the deal hasn’t been announced. Goldman Chief Executive Officer David Solomon said Monday the bank expects to take a $400 million hit from the transition of its GM cards business and other small retail ventures.
It’s all part of Goldman’s drawn-out retreat from a retail-banking business that went from a source of growth to an embarrassing misadventure. The New York-based lender also attracted regulatory scrutiny in addition to getting burned by mounting losses as customers struggled to keep up with their borrowings.
Representatives for Goldman Sachs and Barclays declined to comment. “We’ve made significant progress on the transition of the GM card platform,” Solomon said Monday.
For its part, Barclays has vowed to grow its US consumer credit card business in the coming years as Chief Executive Officer C.S. Venkatakrishnan looks for ways to boost the British bank’s lagging returns. The company has said it hopes to increase assets tied to the business by $10 billion in the coming years.
“We expected some of that to come from the growth in the existing stock,” Venkatakrishnan told investors at a conference this week. “We also said over a three year period you’ve got to assume that there may be one or two add-ons and maybe one subtraction in terms of accounts, that’s the normal way things are.”
Goldman offered three different credit cards with General Motors and the products offered rich rewards, including seven points for every dollar spent with the automaker and four points for every dollar spent everywhere else. The points could be redeemed for a penny each when they were put toward the purchase of a new vehicle with the carmaker, Goldman’s website showed.
The partnership with General Motors was one of two credit-card programs that Goldman managed to secure when it was trying to become a Main Street lender and it paid a premium to Capital One Financial Corp. to secure the deal back in 2021. At the time, it had beaten out Barclays to win the GM cards business.
Goldman is also seeking to offload the portfolio of loans tied to its other credit card partnership with Apple Inc., its much bigger and more splashy tie up that has also turned into a source of headache. The bank has struggled to find a partner to take over that card partnership after agreeing to terms that were really attractive for Apple but not so much for the bank issuing the cards.
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