Four years after partnering on the Apple Card, Goldman Sachs faces a costly exit from a partnership that is seen by other lenders as too risky and unprofitable.
Saeed Azhar and Lananh Nguyen for Reuters:
In searching for a buyer for its share of the partnership, Goldman will face pressure from bidders to reduce the value of its stake in order to make the price more attractive, according to two sources familiar with the matter who declined to be identified discussing potential talks.
Prospective bidders will likely push Apple to change the terms of the deal, the two sources said.
They will likely seek access to Apple’s proprietary credit card data, two other sources familiar with the business, said. Apple cardholders’ data is not sold to third parties for marketing or advertising, according to its website.
Credit card issuers such as Synchrony Financial, Citigroup, and Capital One would be logical partners to take on the venture if terms are changed, according to the two sources and another source familiar with the situation.
MacDailyNews Take: Apple is worth more than all of these banks combined. What prevents Apple from setting up its own subsidiary bank? Probably the risk of too many loses, complaints (and, potentially, lawsuits) from bad credit risk applicants not getting approved, etc. It’s a regulatory can of worms.
Hopefully, Apple can find a strong, experienced banking partner who can run Apple Card, high yield Savings, and the rest competently and without Apple ceding customer data.
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I guess just enjoy your Apple Card while the system lasts. Which existing CC group do people think would actually pick up the system with minimal term changes?
When Apple launched iPhone, it didn’t go with the biggest gorillas in the jungle. It went with Cingular, a smaller player, that AT&T soon scooped up because, in part, it spied growth in Cingular that it wanted for its own. If Cingular had remained independent, given the exponential growth of iPhone adaptation, Cingular might well have risen to be the dominant US carrier. Apple gave Goldman a chance on its credit card, and Goldman was unable to capitalize on it. While the iPhone and credit card situations are not the same, Apple doesn’t need a top-tier bank. It just needs a smart financial partner that is willing to grow. And grow. And grow.