Report: Apple walking away from its Goldman partnership
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Goldman Sachs' credit card alliance with Apple is nearing an end, the WSJ reported Tuesday.
Why it matters: The end of its Apple deal would mark the conclusion of Goldman's troubled foray into consumer lending.
Driving the news: Apple recently sent a proposal to Goldman to exit the partnership in the next 12-15 months, according to the report.
Context: For months, Goldman has been seeking to unwind the partnership — that includes both its credit card and savings product — and reportedly had been in talks with American Express to take over the Apple Card business.
- The exit comes amidst a broader retreat from consumer lending, as Goldman has divested mass-market and consumer units to focus on its core investment banking business.
By the numbers: Goldman disclosed earlier this year that its consumer lending business had lost about $3 billion since 2020 on a pretax basis, and that loss grew to about $4 billion by the second quarter of this year.
Zoom in: In September, Goldman sold installment lending platform GreenSky for less than a third of what it paid to acquire the business 18 months prior.
- That followed the divestment of its Personal Financial Management unit, which it had acquired for $750 million in 2019.
- The bank also reportedly plans to end its credit card partnership with GM.
The intrigue: Beyond Goldman's desire to move on from consumer lending, the exit would bring to an end what has been reported as a contentious partnership between the firms.
- That's partly due to Apple's insistence that the card doesn't charge fees, which sapped its partner of a potential revenue stream.
- Apple also insisted that cardholders be billed at the beginning of each month, as opposed to on a rolling basis, which caused customer service headaches for the bank.
- The partnership is believed to have brought Goldman under regulatory scrutiny, leading the CFPB to investigate the bank's "credit card account management practices."
What we're watching: Given Apple's unique requirements for the card program, it's unclear who would take over the business after it moves on from Goldman.
- The WSJ report mentions Synchrony Financial, which runs card programs for Amazon and PayPal, as a possible suitor.
Apple could not be reached for comment, and Goldman Sachs declined to comment on the report.
Ryan Lawler co-authors the Axios Pro Fintech deals newsletter. Start your free trial at AxiosPro.com
