After months of searching for a buyer, Goldman Sachs may have finally found a suitor interested in taking the General Motors credit card program off its hands, potentially ending a collaboration that never really took off.
According to reporting from the Wall Street Journal, Barclays is the leading candidate to assume the issuance of the credit cards, following unsuccessful negotiations with US Bancorp and Bread Financial.
The official partnership between Goldman and GM began in 2022, but encountered immediate challenges. Goldman executives complained about what they saw as insufficient promotion of the card. Goldman sent a notice to its employees last November announcing that it was planning to terminate the entire GM co-branding program.
Interestingly, Barclays had been the runner-up four years ago when Goldman paid $2.5 billion to acquire the GM partnership from Capital One. Since then, Barclays has ventured into the U.S credit card market through collaborations with retailers like The Gap.
Troubled Segments
In January, Goldman announced that its Platform Solutions unit, responsible for managing its credit card operations and its erstwhile consumer lending unit GreenSky, had incurred losses of $3 billion since 2020. Goldman sold GreenSky, initially seen as its entry into the buy now, pay later sector, last October, just a year after buying it for $1.7 billion. The Wall Street Journal reported that a consortium led by Sixth Street Partners purchased GreenSky from Goldman for roughly $500 million.
Goldman has also partnered with Apple on its credit card and savings account offerings, but this partnership is also coming to an end. Last November, Apple proposed canceling the partnership within 12 to 15 months as it sought a new banking provider for the Apple Card and Apple Savings services.
“There is a learning moment here,” Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, said at the time. “You can’t buy your way into the credit card business. If you lower lending standards, you will pay a price with credit losses. Extending credit requires discipline, modeling, and an acceptance of reality.”
A Tough Sell
The GM card has always had a narrow appeal, despite the fact that the carmaker sold 2.6 million vehicles last year. The cards were attractive to loyal GM customers who planned to purchase a new or used vehicle, as they offered a generous 7x points on all purchases.
However, for those not considering a GM vehicle purchase, the card offered limited benefits. Since all rewards were focused on General Motors, it made the most sense for individuals buying multiple GM products. But how often does one purchase a new car anyway?
