Goldman Sachs’ consumer banking unit — which Chief Executive David Solomon previously has likened to Amazon’s cloud computing juggernaut AWS for its growth potential — will suffer hefty losses this year, according to a report.
The consumer bank, known as Marcus, will lose more than $1.2 billion in 2022 according to the bank’s internal projections, Bloomberg News reported on Tuesday, citing people with knowledge of the matter.
The burn rate in the second quarter is in line with those forecasts, according to the report.
It’s a dramatic change from three years ago when Solomon claimed if Marcus “were out in Silicon Valley and made 20% of the progress that we’ve made, we would get a lot of credit and people would be throwing money at us to own a piece of this business.”
The disappointing results follow a rash of exits from the consumer bank last year. Reports at the time suggested an “avalanche” of overworked and exhausted employees were fleeing the bank. At the time, Goldman dismissed the stories saying Marcus remained a “magnet for talent.”
A spokesperson for the bank did not immediately respond to a request for comment.
The losses stem from the addition of new business lines, pandemic effects and a surge in costs, the report said, adding that the bank will also be forced to set aside more provisions for loan losses as the economy sputters.
Wall Street’s premier investment bank has been in the process of reshaping itself and bulking up its consumer banking business in a bid to reduce its reliance on trading and investment banking revenues.
Still, it’s a disappointment for Solomon who claimed average Americans would “aspire to be affiliated with our brand.” He said that if the company offered services Americans want they would have, “plenty of customers.”
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