In its third-quarter results, Goldman Sachs is expected to record a pretax impact of about $400 million as a result of its continuous attempts to wind down its struggling consumer business. This action is a component of the bank’s larger plan to put asset and wealth management back in the forefront.
At a presentation on Monday, CEO David Solomon disclosed that the sale of Goldman’s GM Card business and a distinct loan portfolio is what caused the significant financial impact. The bank’s revenues should suffer as a result of this divestment when its quarterly financial results are revealed the following month.
The decision to offload these assets comes amid broader turbulence related to Goldman Sachs’ foray into consumer retail. The bank had initially pursued aggressive growth in this sector, including the expansion of its credit card business and a partnership with Apple on the Apple Card. However, this expansion led to significant losses and regulatory challenges, prompting Goldman to reassess its strategy.
Since late 2022, Goldman Sachs has been unwinding its consumer operations, marked by a series of write-downs and the sale of various segments of its consumer business. The latest move involves selling the GM Card platform, which was reportedly in talks with Barclays earlier this year, according to The Wall Street Journal.
In addition to the consumer business issues, Solomon indicated that Goldman Sachs is also facing a decline in trading revenues. The bank anticipates a 10% decrease in trading income for the quarter, attributed to tough year-over-year comparisons and challenging conditions in the fixed-income markets, particularly in August.
The focus now shifts to Goldman Sachs’ core areas of asset and wealth management, which the bank aims to leverage for future growth. The restructuring marks a significant pivot from its earlier consumer-focused ambitions, reflecting broader strategic adjustments in response to market and regulatory pressures.
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