Goldman Sachs Group Inc (NYSE:GS) is reportedly in discussions to shift its General Motors Company (NYSE:GM) credit-card program to Barclays PLC (NYSE:BCS), marking a huge move in Goldman's withdrawal from consumer lending.
Barclays emerges as the top contender to take over the credit-card issuance, which currently holds approximately $2 billion in balances, according to a report from The Wall Street Journal. A potential agreement could be reached by summer.
While other contenders like U.S. Bancorp (NYSE:USB) and Bread Financial Holdings Inc (NYSE:BFH) were initially in the running, they have recently withdrawn, according to the report.
However, there's no assurance that Barclays will finalize the deal, as another potential buyer might emerge.
Goldman's decision to exit the partnership was communicated to employees in November, following challenges in customer acquisition.
Executives expressed frustration over what they perceived as insufficient promotion efforts by GM car dealers, the report further added.
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This prospective deal signifies a crucial step in Goldman's strategy to disentangle itself from Main-Street lending, a process initiated in late 2022.
The bank's Platform Solutions division, encompassing the GM credit cards and other consumer lending ventures, incurred about $6 billion in losses from 2020 through first-quarter of 2024, the report mentioned.
For Barclays, acquiring the GM credit-card program aligns with its efforts to broaden its U.S. credit-card portfolio beyond travel cards.
A new rule by the Consumer Financial Protection Bureau is expected to reduce late fees, potentially impacting lenders' revenues.
The report further specified that banks evaluating the GM program face the challenge of enhancing card relevance in a fiercely competitive market, where consumers prioritize travel rewards.
Goldman Sachs stock gained more than 26% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Broker-Dealers & Securities Exchanges ETF (NYSE:IAI) and Vanguard Total Stock Market Index Fund ETF (NYSE:VTI).
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Price Action: GS shares closed higher by 0.76% at $430.81 on Monday.
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