Goldman Sachs wants to get out of the Apple card business, reports claims
Goldman Sachs’ third-quarter earnings could be the final straw Apple card as the Wall Street giant faces internal pressure to exit the consumer lending business. The Apple partnership has long been viewed as a distraction from Goldman’s core business, according to the Wall Street Journal reported Monday. Regarding the recently introduced Apple savings accountsa Goldman partner told colleagues, “We never should have done that damn thing.” (Magazine censorship)
Goldman is under intense pressure to cut losses as analysts expect the bank’s profits to decline significantly in the quarter. Apple’s products with the bank could be on the rocks if profits are as poor as expected. According to Wall Street Journal sources, senior executives are looking to exit the consumer lending space, and Apple’s financial products could be as well dumped to another bank – possibly American Express.
Goldman shares are down 11% in 2023, but the entire banking industry is In the dumps this year. An index of America’s largest banks fell 24% in 2023 due to regional bank failures, higher interest rates and increased regulation, while the S&P 500 rose 14%.
In October 2019, Goldman Sachs became CEO David Solomon called The Introducing the Apple Card “The most successful credit card launch of all time.” Apple’s Tim Cook said Around the same time, the card would represent “the most significant change in the credit card experience in 50 years.”
The tone has certainly changed, with many Goldman executives wondering whether the push into retail banking should ever have happened. Once heralded as innovative, the partnership between Silicon Valley and Wall Street powerhouses is now one of the most scrutinized decisions of Solomon’s career.
The only thing that holds Apple to the infamous Wall Street institution is this High-Interest Apple Savings Accounts started a few months ago. These accounts remained hugely popular, attracting billions in deposits that Goldman can’t part with. If Goldman backs out of the Apple deal, the bank could be forced to raise expensive capital in a short period of time.
Solomon’s partnership with Apple will continue for the remainder of his term. The flashy CEO stood opposite intensive review among Goldman partners because of its focus on consumer lending and lack of focus on the traditional cornerstones of banking. Partners privately called for Solomon’s complete overthrow. Goldman Sachs recently sold Green Sky, another consumer lending platform touted by Solomon, for a deal steep discount at the price the fintech company bought it for last year.
