Goldman Sachs Group Inc.
Chief Executive Officer David Solomon said on Tuesday that the bank is “assessing strategic options” for its consumer platform business, which includes specialty lender GreenSky and credit card partnerships with Apple Inc. and General Motors Co.
Mr Solomon made the comments while speaking at the bank’s investor day.
“I’ve certainly done a lot of reflecting over the last three years,” he said, referring to the bank’s consumer businesses. “There were some clear successes, but there were also some clear stumbles.”
Mr. Solomon did not immediately provide more details, although the language he used could suggest a sale of GreenSky or its card partnership. Less dramatically, it could represent some kind of restructuring of the card deals to make them more lucrative for Goldman, or allow another bank to become an issuer alongside Goldman.
Goldman is exploring options as it works to make GreenSky and cards profitable. Should the latter occur, it is possible that Goldman would not go through with a sale or other change.
“We are focused on profitability, the right strategy and will be nimble and flexible,” Mr Solomon said. “We’ve scaled back our ambitions for consumer strategy significantly.”
Goldman, the epitome of a Wall Street firm for generations, has struggled in its foray into Main Street banking. In earnings results released in January, the bank revealed that its Platform Solutions unit had lost $3.8 billion in pre-tax profits since the start of 2020.
Goldman said on Tuesday that it aims to break even before taxes in Platform Solutions by 2025.
Platform solutions include GreenSky and the card partnerships – together called consumer platforms. It also includes another business called transaction banking, which offers payment services to banks and companies. That unit is currently profitable, the company said.
His remarks were a marked departure from Goldman’s last investor day of 2020, when the firm said it was building a leading digital consumer bank that would address a range of consumer banking and lending needs.
The stakes are high for Mr. Solomon. Many investors have become frustrated because they believe Goldman has not provided enough clarity about what it will be. Some believe Goldman’s efforts were too ambitious for a bank that did not have consumer loans in its DNA.
“It became clear that we lacked certain competitive advantages and that we were doing too much too quickly,” Mr. Solomon said Tuesday.
The potential for a slowing economy, with overall delinquencies increasing and banks having to set aside more money for bad loans, also helped convince Goldman to pull back.
Goldman President John Waldron said Tuesday that consumer platforms are “significantly weighed down” by reserves and operating expenses. He said Goldman is focused on making “the right strategic decisions … to make sure we understand every opportunity to unlock value.”
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