Goldman Sachs Sells Apple Card to JPMorgan in Costly Retreat
The investment bank is divesting the $20 billion program at a reported $1 billion discount, marking a definitive end to its troubled consumer lending ambitions.
Goldman Sachs is officially ending its ambitious and turbulent foray into consumer credit, agreeing to sell its high-profile Apple Card portfolio to JPMorgan Chase. The deal marks a significant strategic retreat for the Wall Street giant, which is reportedly offloading the program's $20 billion in outstanding balances at a steep $1 billion discount.
Shares of Goldman Sachs fell 1.5% to $941.02 in Wednesday trading as investors reacted to the costly exit. The sale crystallizes the financial sting of a multi-year venture that struggled to achieve profitability, suffering what one report described as "billions in losses on soured loans and charge-offs" due to riskier-than-expected underwriting.
The Apple Card, launched in 2019, was the flagship product of Marcus, Goldman’s consumer banking arm. It was intended to diversify the firm's revenue away from the volatile worlds of trading and investment banking. However, the partnership was reportedly fraught with challenges, including higher-than-anticipated credit losses from a customer base that did not align with Goldman's traditional ultra-high-net-worth focus.
For JPMorgan, the acquisition is a strategic consolidation. As the nation's largest bank, with a market capitalization exceeding $900 billion, it already operates a dominant credit card business with a portfolio of successful co-branded cards with partners like Amazon, Marriott, and United Airlines. Acquiring the Apple Card adds a powerful technology brand to its roster and expands its reach.
Even so, the complexities of the integration may have given some investors pause, with JPMorgan shares also trading down 2.3% to $326.99 on the day of the news, which was first reported by The Wall Street Journal. New applicants for the Apple Card may face more stringent credit checks under JPMorgan, which is known for its disciplined underwriting standards, including its informal "5/24 rule" that limits new card approvals.
The move is a key part of CEO David Solomon's plan to refocus Goldman Sachs on its core strengths: investment banking and asset and wealth management. The bank has been systematically unwinding its Main Street ambitions to shore up its financial performance and return to the more profitable businesses that have defined it for decades.
For Apple, the transition to a seasoned credit card issuer in JPMorgan ensures the popular financing tool, a key part of its consumer hardware sales strategy, remains stable. The handover of the associated Apple Savings account is also expected, with JPMorgan likely to integrate the feature into its own vast consumer banking ecosystem. For Goldman Sachs, however, the sale closes a costly chapter and serves as a stark reminder of the distinct challenges of consumer banking.