With GreenSky Sale, Goldman Sachs CEO David Solomon is Pivoting From Consumer Banking

Goldman Sachs bought GreenSky, a buy-now, pay-later platform, in 2021 for $2.24 billion. Now it wants out.

Bald middle-aged white man in suit and tie.
David Solomon at the Milken Institute Global Conference on May 2, 2022. Patrick T. Fallon/AFP via Getty Images

Goldman Sachs (GS) is looking to sell its lending platform GreenSky as it continues its exit from consumer banking, the firm’s CEO and chairman David Solomon announced today (April 18) during a conference call to discuss the firm’s quarterly earnings .

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“We believe GreenSky is a good business and is performing well with first-quarter originations in our core home improvement loans,” said Solomon “Given our current strategic priorities, however, we may not be the best long term holder of this business,” he said.

Goldman Sachs announced its acquisition of the buy now, pay later fintech platform in 2021 for $2.24 billion.

While Goldman Sachs has historically focused on investments and trading, it launched Marcus, a consumer banking unit, in 2016, followed by a 2019 credit card business with Apple (AAPL). However, the firm’s foray into consumer lending has failed to turn a profit, reportedly culminating in $3 million worth of losses since 2020. Now, the firm appears to be pulling back from its consumer ventures to focus on its core Wall Street activities.

Solomon, who joined Goldman Sachs as a partner in 1999 before becoming CEO in 2018, first announced in February that the firm was considering “strategic alternatives” for its consumer business.

“We made a strategic decision, kind of 12 months ago at this point, to really narrow our consumer focus and we’ve been executing on it,” said Solomon during today’s earnings call. “The Marcus loan portfolio was profitable but small, wasn’t strategic,” he said.

Why is Goldman Sachs selling its consumer businesses?

The firm’s revenue of $12.2 billion fell 5 percent in the last three months compared to 2022, while its earnings decreased 18 percent to $3.23 billion. Its $1.58 billion and $3.93 billion in investment banking revenue and fixed-income trading in the first quarter also declined by a respective 26 percent and 17 percent.

However, Solomon said Goldman Sachs delivered a solid performance in light of recent financial challenges, such as the recent collapse of Silicon Valley Bank.

“It’s important to appreciate the size of disruption,” he said. “As we sit here today, it appears that the worst of the volatility is behind us.”

The first quarter earnings of Goldman Sachs also noted a $470 million loss on the partial sale of its Marcus portfolio, a consumer banking unit it launched in 2016, with the remainder of the portfolio transferred for sale. This loss was largely offset by a reserve reduction of $440 million in provision for credit losses.

Earlier this week, Goldman Sachs also revealed that it is partnering with Apple to release a high-yield savings account for Apple Card holders which will offer 4.15 percent in interest compared to the 3.9 percent interest rate paid by Marcus.

While Solomon referred to the new venture as “another deposit channel,” he noted during today’s earnings call that it will be monitored closely for potential “cannibalization” or negative effects on Marcus offerings. “This is small at the moment and we’ll watch it carefully, but I think it’s an interesting opportunity for the firm.”

With GreenSky Sale, Goldman Sachs CEO David Solomon is Pivoting From Consumer Banking