General Motors' Credit Card, Brought to You By Goldman Sachs
October 01 2020 - 2:36PM
Dow Jones News
By AnnaMaria Andriotis and Liz Hoffman
Goldman Sachs Group Inc. is buying General Motors Co.'s
credit-card business for about $2.5 billion, a deal that furthers
the Wall Street giant's push into Main Street lending.
Goldman Sachs, a newcomer to the credit-card space, won the
bidding over Barclays PLC, people familiar with the matter said,
handing the Wall Street firm more than a million GM cardholders and
their roughly $8.5 billion in annual spending.
It is the second win in the credit-card sector for Goldman,
which launched its first credit card last year with Apple Inc. and
is on the hunt for other deals in co-branded cards. But it is
barging in at a precarious moment: Banks deferred payments for
millions of cardholders facing financial hardship from the
coronavirus pandemic, and have set aside billions of dollars to
cover potential losses if the debt doesn't get paid back.
The Wall Street Journal reported in August that Goldman and
Barclays were rival bidders for the card, which is a relatively
small fish with roughly $2.5 billion in outstanding balances but
comes with a brand-name partner in GM and opportunities to embed
payments in cars.
Goldman and Capital One Financial Corp., which has issued GM's
card since 2012, have agreed on the outline of a deal, including
the purchase price, the people said. They expect to finalize it in
the coming weeks if it doesn't fall apart. Goldman is likely to pay
a slight premium for the debt and hope to make up any future losses
by selling GM cardholders on its own products, which include online
savings accounts, personal loans and investment products.
Capital One still has about a year left on its contract.
Goldman doesn't have branches or a brand that consumers know, so
it is turning to partnerships to find customers. In addition to its
Apple card, which had $4.5 billion in outstanding balances as of
June 30, it has signed deals to lend to JetBlue Airways Corp.'s
passengers and Amazon.com Inc.'s marketplace sellers. It is also
pitching big companies like Google on offering financial-wellness
plans to their employees.
Both Goldman and Barclays in their pitches to GM promoted the
idea of cars as e-commerce portals. That push is supported by both
auto makers and card networks like Visa Inc. and Mastercard Inc.,
but it has been slow to catch on with consumers. GM was the first
major car company to allow drivers to order food, pay for gas and
book hotel stays from dashboard touch screens.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com and
Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
October 01, 2020 14:21 ET (18:21 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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