WSJ: ‘Goldman Is Looking for a Way Out of Its Partnership With Apple’

AnnaMaria Andriotis, reporting for The Wall Street Journal (News+ link):

The Wall Street firm is in talks with American Express to take over its Apple credit card and other ventures with the tech giant, according to people familiar with the matter. Goldman went public with plans to scale back its consumer business late last year, but it appeared committed to the Apple relationship. The bank recently extended the partnership through the end of the decade, agreed to support Apple’s “buy now, pay later” offering and launched a bank account with the tech company.

Now it is in talks to offload those businesses and its credit-card partnership to Amex, according to people familiar with the discussions. A deal with Amex isn’t imminent or assured, people familiar with the conversations said, and it could take a while to transfer the partnership in any case. Apple would have to agree to a transfer. The tech company is aware of the talks, which have been ongoing for months, the people said. [...]

In January, Goldman disclosed that it had lost about $3 billion on the consumer-lending push since 2020.

It’s unclear how much of Goldman’s losses in their consumer banking foray are attributable to the Apple Card specifically, but Sridhar Natarajan reported for Bloomberg* back in January that it’s the source of most of their losses:

The division’s $1 billion pretax loss reported for 2021 was mostly tied to the Apple Card, people with knowledge of the numbers said. And about $2 billion in 2022 mainly stems from the Apple card and installment-lending platform GreenSky, the people said.

How you lose money issuing credit cards that charge usurious interest rates is beyond me. Not quite in the territory of Donald Trump somehow losing money while running casinos, but it’s up there. Are they issuing Apple Cards to deadbeats? (Apparently, yes: they’ve been issuing a lot of cards to people with bad credit.)

If Goldman does bail, AmEx would be as good a partner as any for Apple: they know how to deliver a premium experience and turn a good profit doing so.

* You know.

Monday, 3 July 2023