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Goldman (GS) Likely to See Notable Writedown on GreenSky Sale
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The Goldman Sachs Group, Inc. (GS - Free Report) is expected to book a notable writedown for the sale of its consumer lending platform, GreenSky, per CNBC that cited people with knowledge of the sale process.
CNBC also noted that the bids received for the platform were well below Goldman's expectations. Two bidders estimated GreenSky's loan origination platform to be worth $300 million and $500 million, respectively, according to the report.
"We're pleased with the participation by bidders, we're in the middle of the process and we'll learn more as we go forward," per a Goldman spokesperson in an emailed statement to Reuters.
In March 2022, Goldman completed its purchase of GreenSky in an all-stock transaction valued at $2.24 billion.
GS acquired GreenSky, a pre-eminent fintech platform that offers home-improvement consumer loans, to augment its retail lending footprint. However, this April, the company disclosed its intention to sell GreenSky, with management declaring that the business was not in line with the bank’s “current strategic priorities.”
Also, at an industry conference earlier this month, management noted that the company may recognize an impairment of $500 million of goodwill related to the sale.
Earlier, it was reported that GS received buyout offers from investment firms Apollo Global Management, Sixth Street and Warburg Pincus for the lending platform.
Goldman has undertaken a major business restructuring initiative to refocus its business on its core strengths of investment banking and trading, while reducing its retail footprint. Hence, the sale is an apt fit with this strategic overhaul.
Also, Goldman aims to cease unsecured loan offerings to consumers through Marcus. In the first quarter of 2023, the firm sold $1 billion of Marcus loans and transferred the remaining $2.88-billion loans to be held for sale. As a result, the firm incurred a loss of $470 million in net revenues, largely offset by a related reserve reduction of $440 million in provision for credit losses. Nonetheless, it is focused on its credit card platform business.
Over the past six months, shares of GS have lost 4.9% compared with the industry’s decline of 10.1%.
As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
Per people with knowledge of the matter, BCS started the divestiture process for a portfolio of mainly performing loans to individuals, while the package includes non-performing mortgages and high-risk loans in Swiss francs.
Citizens Financial Group, Inc. (CFG - Free Report) announced that it would stop originating indirect auto loans, effective Jul 1, 2023. The decision was taken as part of CFG’s strategy to optimize its balance sheet and concentrate on relationship-based lending.
CFG began to reduce the number of active dealer relationships and de-emphasize its auto loan origination volume in third-quarter 2022. Nonetheless, the existing auto loans on its balance sheet will be retained and serviced by CFG.
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Goldman (GS) Likely to See Notable Writedown on GreenSky Sale
The Goldman Sachs Group, Inc. (GS - Free Report) is expected to book a notable writedown for the sale of its consumer lending platform, GreenSky, per CNBC that cited people with knowledge of the sale process.
CNBC also noted that the bids received for the platform were well below Goldman's expectations. Two bidders estimated GreenSky's loan origination platform to be worth $300 million and $500 million, respectively, according to the report.
"We're pleased with the participation by bidders, we're in the middle of the process and we'll learn more as we go forward," per a Goldman spokesperson in an emailed statement to Reuters.
In March 2022, Goldman completed its purchase of GreenSky in an all-stock transaction valued at $2.24 billion.
GS acquired GreenSky, a pre-eminent fintech platform that offers home-improvement consumer loans, to augment its retail lending footprint. However, this April, the company disclosed its intention to sell GreenSky, with management declaring that the business was not in line with the bank’s “current strategic priorities.”
Also, at an industry conference earlier this month, management noted that the company may recognize an impairment of $500 million of goodwill related to the sale.
Earlier, it was reported that GS received buyout offers from investment firms Apollo Global Management, Sixth Street and Warburg Pincus for the lending platform.
Goldman has undertaken a major business restructuring initiative to refocus its business on its core strengths of investment banking and trading, while reducing its retail footprint. Hence, the sale is an apt fit with this strategic overhaul.
Also, Goldman aims to cease unsecured loan offerings to consumers through Marcus. In the first quarter of 2023, the firm sold $1 billion of Marcus loans and transferred the remaining $2.88-billion loans to be held for sale. As a result, the firm incurred a loss of $470 million in net revenues, largely offset by a related reserve reduction of $440 million in provision for credit losses. Nonetheless, it is focused on its credit card platform business.
Over the past six months, shares of GS have lost 4.9% compared with the industry’s decline of 10.1%.
Image Source: Zacks Investment Research
Currently, GS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restructuring Efforts by Companies
As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
Per people with knowledge of the matter, BCS started the divestiture process for a portfolio of mainly performing loans to individuals, while the package includes non-performing mortgages and high-risk loans in Swiss francs.
Citizens Financial Group, Inc. (CFG - Free Report) announced that it would stop originating indirect auto loans, effective Jul 1, 2023. The decision was taken as part of CFG’s strategy to optimize its balance sheet and concentrate on relationship-based lending.
CFG began to reduce the number of active dealer relationships and de-emphasize its auto loan origination volume in third-quarter 2022. Nonetheless, the existing auto loans on its balance sheet will be retained and serviced by CFG.