The Goldman Sachs Group, Inc. (GS – Free Report) received a proposal from Apple Inc. (AAPL – Free Report) to end the credit card partnership in the next 12 to 15 months. This was first reported by the Wall Street Journal.
Per Reuters article, when asked about the proposal, Apple stated, “Apple and Goldman Sachs are focused on providing an incredible experience for our customers to help them lead healthier financial lives. The award-winning Apple Card has seen a great reception from consumers, and we will continue to innovate and deliver the best tools and services for them”.
In 2019, Apple Card was introduced by AAPL and issued by GS. Apple Card reinvented the concept of credit cards and enhanced the level of privacy and security.
In April 2023, a savings account facility by Goldman was offered to owners and co-owners of Apple Card subject to certain eligibility requirements. As of Apr 14, 2023, the savings account offered an annual percentage yield of 4.15%. This involved no fees, no minimum deposits, and no minimum balance requirements. On Aug 2, 2023, Apple reported that the savings account had reached over $10 billion in deposits since its introduction.
Per a Reuters article, the proposal included retreating from the entire consumer partnership with Goldman. This included both credit card and savings account facilities.
GS’ partnership with AAPL was part of Wall Street Banks’ strategy to grow its consumer franchise. The partnership was extended a year ago and was expected to continue through 2029.
Per Bloomberg, a person familiar with the matter stated, “The iPhone maker remains committed to its Apple Card credit card and savings account and doesn’t plan to discontinue the products — whether or not Goldman is involved”. Additionally, the person asserted that Apple has not yet initiated conversations with other firms that would replace GS.
Apple’s proposal to exit its partnership with Goldman comes in line with the bank pulling back from its consumer lending business as it proved to be costlier than expected. Hence, Goldman’s CEO, David Solomon, decided to shift the bank’s focus back to its traditional strengths — investment banking and trading.
Accordingly, earlier this month, GS has made efforts to offload its General Motors Company (GM – Free Report) credit card program (Read More – Goldman Sachs (GS – Free Report) Plans to Offload GM Credit Card Program). The firm informed its employees within the Platform Solutions division, who work on GM card, that this process of searching for a new issuer will be initiated by GM.
Last month, the company entered into an agreement with a consortium led by investment firm Sixth Street Partners to divest its consumer lending platform, GreenSky, and associated loans.
Goldman’s shares have gained 1.7% over the past six months compared with the industry’s 1.5% growth.
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GS presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.