After nearly two months of speculation, it seems that the Goldman Sachs Group has won the bidding to purchase GM’s credit card business for roughly $2.5 billion. Also in the run for it was Barclays, reportedly.
According to Reuters, citing the WSJ, General Motors‘ credit card issuer, Capital One and Goldman have already agreed on the purchase price and could finalize the deal in the coming weeks.
This acquisition will enhance Goldman’s focus on its consumer banking business, which it wants to expand so as to compensate for “volatile” results from other segments such as trading and investment banking.
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Without this deal in place, Goldman would have had a much smaller presence in the consumer banking sector, unlike rivals such as JPMorgan Chase or Citigroup, which is why CEO David Solomon pushed for it to happen.
This is Goldman’s second major credit card partnership, following the launch of a consumer credit card with Apple last year. It also comes at a time when U.S. households are actually cutting back on debt because of the ongoing viral pandemic and its effects on the population.
GM’s credit card unit has been run by Capital One since 2012 and holds $3 billion in outstanding balances. There are currently three credit cards on offer – a BuyPower Card (used by over 7.7 million buyers) aimed at offering savings on car purchases (and other perks), a business card offering three cash-back earnings tiers at gas stations, restaurants and office supply stores, and a GM employee and suppliers card.
