David Solomon, CEO of Goldman Sachs, during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York on Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is pleased to announce the sale of its fintech lending platform GreenSky to a group of investors led by private equity firm Sixth Street, according to a statement released on Wednesday.
This agreement, which encompasses a portfolio of loans originated by Goldman Sachs, will have a negative impact of 19 cents per share on third-quarter earnings. Goldman Sachs, headquartered in New York, is scheduled to announce its results next Tuesday.
This move marks CEO David Solomon’s latest effort to scale back on his unsuccessful foray into retail banking. Despite objections from his subordinates who believed the home improvement lender was an unsuitable fit, Solomon acquired GreenSky last year for $1.7 billion. A few months later, he decided to explore offers for the business as part of his larger strategy to distance the company from consumer finance. Goldman Sachs also divested its wealth management division and reportedly entered into discussions to offload its Apple Card operations.
“This transaction indicates our ongoing progress in narrowing the focus of our consumer business,” stated Solomon.
Additionally, he emphasized that the bank’s primary focus is now on investment banking, trading, and expanding its asset and wealth management fees.
Goldman Sachs will continue to operate GreenSky until the sale is finalized in the first quarter of 2024, according to the bank.
The anticipated impact on third-quarter earnings includes expenses related to writing down GreenSky intangible assets, as well as adjustments to the loan portfolio and higher taxes. However, this will be offset by the release of loan reserves associated with the transaction, as highlighted by Goldman Sachs.
In July, the bank already incurred a second-quarter impairment of $504 million on GreenSky.
The group led by Sixth Street comprises funds managed by KKR, Bayview Asset Management, and CardWorks, as per the statement.
Private equity firms have played significant roles in various asset divestitures within the banking industry this year, providing funding for transactions such as the PacWest merger with Banc of California. Learn more.
Discover more about Goldman Sachs’ challenging GreenSky deal and the potential write-downs it may face on CEO David Solomon’s ambitious endeavor.
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