By Steve Gelsi
Investment bank will book impact of 19 cents a share on third-quarter earnings as it narrows its consumer-banking focus
Goldman Sachs Group Inc. said Wednesday it has agreed to sell its GreenSky consumer-lending unit in a transaction that will impact its third-quarter earnings by 19 cents a share.
The buyer is a private-equity consortium led by Sixth Street Specialty Lending Inc. (TSLX), a New York-based specialist in financing solutions.
The impact of 19 cents a share translates to about $62.6 million against Goldman Sach’s (GS) projected third-quarter profit of $5.86 a share, based on the number of outstanding shares of the investment bank.
Goldman Sachs did not disclose the price of the sale. The buyers also include KKR & Co. (KKR), Bayview Asset Management and CardWorks. As part of the deal, Pimco is providing support for an asset acquisition and CPP Investments is providing financing.
The impact reflects an increase in operating expenses for the write-down of intangibles, as well as a drop in net revenue related to marks on GreenSky’s loan portfolio and an increase in taxes, the bank said. This was largely offset by a release of loan reserves reflected in provision for credit losses, the bank said.
Goldman Chief Executive David Solomon said the deal “demonstrates our continued progress in narrowing the focus of our consumer business.”
The investment bank acquired GreenSky for $2.25 billion in 2021, at time when it was building out its Marcus consumer-banking unit.
Early this year, however, Goldman made a U-turn on the effort and disclosed a $3 billion loss on its consumer business, as well as plans to divest GreenSky.
The bank also realigned its businesses into three main units: Global Banking & Markets, Asset & Wealth Management and Platform Solutions.
Criticism of Solomon started to build this year and spilled into media reports, including a Wall Street Journal article that said a war had broken out between partners at Goldman Sachs.
Also read: Goldman Sachs CEO David Solomon says he doesn’t recognize ‘caricature’ that critics have painted of him
-Steve Gelsi
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10-11-23 1514ET
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