Goldman Sachs Reevaluates Apple Credit Card, Says Report

Goldman Sachs is reportedly reassessing its consumer lending ventures, including its partnership with Apple on credit card products, says the Wall Street Journal.

According to people familiar with the matter, some senior executives at Goldman are contemplating exiting the consumer lending space entirely, which would include the Apple credit card and other Apple financial products. No final decision has been made, but conversations with American Express have been held, as previously reported by Wall Street Journal.

The reconsideration comes as Goldman Sachs faces internal dissatisfaction with its consumer lending operations. Partners within the bank have expressed that the venture has been more problematic than beneficial, attributing the expansion into this area to CEO David Solomon.

The unit that includes credit cards and GreenSky, a company Goldman is selling at a loss, has reportedly lost billions of dollars. Regulatory scrutiny is also increasing, with the Consumer Financial Protection Bureau investigating Goldman’s “credit card account management practices.”

Goldman partner Liz Martin, who has been overseeing the bank’s partnerships with Apple and General Motors, is in the process of leaving her position for a different role within the bank.

Meanwhile, American Express has raised concerns about the Apple credit card’s loss rates and other issues, complicating any potential deal. Goldman employees have also floated the idea of Apple taking a larger role in the credit card partnership, such as becoming the lender for new credit card spending, although this has not reached advanced discussions.

The Apple savings account, launched in partnership with Goldman, has quickly attracted billions in deposits, exceeding the bank’s initial cap. This has led some executives to worry that the high balances could complicate any potential separation from Apple. If the partnership were to move to a different bank, Goldman could be forced to raise expensive last-minute funding.

It’s unfortunate that Apple Card and other Apple financial services are only available in the U.S. and not Canada. Now it sounds like Apple’s partnership with Goldman might be on the rocks. It’s hard to see a big Canadian bank partnering up with Apple and giving up control, but maybe a smaller one would.