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Goldman (GS) to Exit Transaction Banking Business in Japan
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Less than a year after entering the transaction banking space in Japan, Goldman Sachs Group Inc. (GS - Free Report) is exiting the business in the country, per a Bloomberg article.
Per Hiroko Matsumoto, a Tokyo-based spokesperson, “Consequently we are closing Goldman Sachs Bank USA Tokyo Branch whose sole function was to support transaction banking in this market.”
Goldman started the business of managing cash flow money for large companies in the United States in 2020. The business was later expanded to the U.K., Germany and the Netherlands. This helped the company to negate volatility in the trading and investment banking space, and expand fee generation sources.
In 2021, GS gained a license from Japan’s Financial Services Agency for corporate cash management operations. Following this, the company started offering services like dollar settlements for Japanese companies overseas. In April 2023, Goldman announced plans to start its transaction banking business in Japan, the first country in Asia, where GS would offer the services.
Nonetheless, the bank remains focused on expanding its transaction banking operations in the United States, the U.K. and the European Union.
Markedly, Goldman has decided to refocus on its core strengths of investment banking and trading operations, while scaling back its consumer banking footprint. Hence, it undertook a major business restructuring initiative. In fourth-quarter 2023, it sold its Personal Financial Management unit to Creative Planning.
Further, in the fourth quarter, it sold the majority of its consumer lending platform, GreenSky’s loan portfolio, and also entered an agreement with a consortium led by Sixth Street Partners to divest GreenSky. The deal is expected to close in the first quarter of 2024.
Goldman aims to cease unsecured loan offerings to consumers through Marcus. In 2023, it sold substantially all of Marcus’s loan portfolio. Apart from these divestitures, the company is offloading its credit card program with General Motors. This is in line with its decision to focus and grow core businesses, wherein it has showcased encouraging results, given its strong leadership position, wide scale of operations and exceptional talent.
Earlier this month, Ally Financial Inc. (ALLY - Free Report) completed the divestiture of its point-of-sale financing business — Ally Lending (that includes $2.2 billion of loan receivables as of Dec 31, 2023) — to Synchrony. The move reflects ALLY's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The deal was announced in January. At that time, ALLY expected the divestiture to bolster its Common Equity Tier 1 (CET1) ratio by 15 basis points at closing. Further, the deal is projected to be modestly accretive to tangible book value and earnings per share this year.
Last month, Truist Financial (TFC - Free Report) entered an agreement to sell the remaining 80% stake in its insurance subsidiary — Truist Insurance Holdings (“TIH”) — to Stone Point Capital and Clayton Dubilier & Rice. Mubadala Investment Company and co-investors are also participating in the investment. In April 2023, the company divested 20% stake in TIH.
Following the deal closure (expected in the second quarter of 2024), TFC’s CET1 capital ratio is expected to increase by 230 basis points, and its tangible book value per share will rise by $7.12 or 33%. The transaction is projected to be dilutive to Truist Financial’s 2024 earnings by 20 cents per share, assuming that the proceeds from the sale were reinvested in cash, yielding 4.5%.
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Goldman (GS) to Exit Transaction Banking Business in Japan
Less than a year after entering the transaction banking space in Japan, Goldman Sachs Group Inc. (GS - Free Report) is exiting the business in the country, per a Bloomberg article.
Per Hiroko Matsumoto, a Tokyo-based spokesperson, “Consequently we are closing Goldman Sachs Bank USA Tokyo Branch whose sole function was to support transaction banking in this market.”
Goldman started the business of managing cash flow money for large companies in the United States in 2020. The business was later expanded to the U.K., Germany and the Netherlands. This helped the company to negate volatility in the trading and investment banking space, and expand fee generation sources.
In 2021, GS gained a license from Japan’s Financial Services Agency for corporate cash management operations. Following this, the company started offering services like dollar settlements for Japanese companies overseas. In April 2023, Goldman announced plans to start its transaction banking business in Japan, the first country in Asia, where GS would offer the services.
Nonetheless, the bank remains focused on expanding its transaction banking operations in the United States, the U.K. and the European Union.
Markedly, Goldman has decided to refocus on its core strengths of investment banking and trading operations, while scaling back its consumer banking footprint. Hence, it undertook a major business restructuring initiative. In fourth-quarter 2023, it sold its Personal Financial Management unit to Creative Planning.
Further, in the fourth quarter, it sold the majority of its consumer lending platform, GreenSky’s loan portfolio, and also entered an agreement with a consortium led by Sixth Street Partners to divest GreenSky. The deal is expected to close in the first quarter of 2024.
Goldman aims to cease unsecured loan offerings to consumers through Marcus. In 2023, it sold substantially all of Marcus’s loan portfolio. Apart from these divestitures, the company is offloading its credit card program with General Motors. This is in line with its decision to focus and grow core businesses, wherein it has showcased encouraging results, given its strong leadership position, wide scale of operations and exceptional talent.
Shares of this Zacks Rank #3 (Hold) company have increased 16.9% in the past six months, outperforming the industry’s growth of 11.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Business Exits by Other Companies
Earlier this month, Ally Financial Inc. (ALLY - Free Report) completed the divestiture of its point-of-sale financing business — Ally Lending (that includes $2.2 billion of loan receivables as of Dec 31, 2023) — to Synchrony. The move reflects ALLY's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The deal was announced in January. At that time, ALLY expected the divestiture to bolster its Common Equity Tier 1 (CET1) ratio by 15 basis points at closing. Further, the deal is projected to be modestly accretive to tangible book value and earnings per share this year.
Last month, Truist Financial (TFC - Free Report) entered an agreement to sell the remaining 80% stake in its insurance subsidiary — Truist Insurance Holdings (“TIH”) — to Stone Point Capital and Clayton Dubilier & Rice. Mubadala Investment Company and co-investors are also participating in the investment. In April 2023, the company divested 20% stake in TIH.
Following the deal closure (expected in the second quarter of 2024), TFC’s CET1 capital ratio is expected to increase by 230 basis points, and its tangible book value per share will rise by $7.12 or 33%. The transaction is projected to be dilutive to Truist Financial’s 2024 earnings by 20 cents per share, assuming that the proceeds from the sale were reinvested in cash, yielding 4.5%.