A recent Wall Street Journal report has shed light on the complex relationship between Apple and Goldman Sachs, revealing an 'unhappy marriage' that ultimately led to a partnership with Chase for the Apple Card.
Apple's initial partnership with Goldman Sachs aimed to make the Apple Card accessible to a wide range of applicants, including those with lower credit scores. However, this strategy resulted in a higher-than-normal number of subprime borrowers, with over 30% of Apple Card balances held by individuals with credit scores below the prime range. This percentage exceeded many specialized subprime lenders.
As Apple moved to end its relationship with Goldman Sachs, it began exploring options with other issuers. In one pitch, Apple described its relationship with Goldman Sachs as an 'unhappy marriage,' stating that the companies were willing to stay together but acknowledged the discomfort of being married to an unwilling partner.
Apple, Goldman Sachs, and other potential issuers considered using a private-credit fund to manage the balances, a strategy that has gained traction for complex financing deals on Wall Street. Apple approached a boutique investment bank to find a suitable fund and also engaged with a small fintech company for a potential partnership.
Goldman Sachs bankers reached out to private-credit firms, while Barclays, considering its own bid, approached KKR for assistance. However, Goldman executives reportedly felt that Apple was not fulfilling its commitments, and the timeline for a decision on the Apple Card takeover extended beyond early March 2025.
During negotiations, Apple was reportedly working on contracts with Chase, American Express, and Synchrony. Synchrony believed it had secured the deal and was exploring cost-effective strategies for card turnover. However, in May 2025, Apple informed Chase that it was its preferred partner.
Apple also reached out to Capital One, offering a potential deal but emphasizing that it had one last chance to get involved. Capital One, focused on its Discover acquisition, still met with Apple and Goldman Sachs as late as June.
Ultimately, Apple chose JP Morgan Chase, which secured protections in case of increased card delinquencies or performance deterioration post-contract signing. Chase also negotiated the right to withdraw before the deal's closure.
The transition from Goldman Sachs to Chase is expected to take place over the next two years, and Apple has promised to provide more details as the process unfolds.
Controversy Alert: Was Apple's strategy with Goldman Sachs a risky move, potentially exposing them to higher credit risks? And with multiple issuers in the mix, how did Apple navigate this complex web of negotiations to ultimately choose Chase? Share your thoughts in the comments!
