JPMorgan Chase is taking on Apple’s credit card, a project that Goldman Sachs promoted several years ago as the flagship of its entry into mass banking. We are talking about a portfolio of approximately $20 billion. Negotiations lasted almost a year. All that remains is the official announcement – unless, of course, nothing goes wrong at the last moment.

Why the deal works for JPMorgan

For JPMorgan, this looks like a neat and logical move. One of the largest co-branded products in the country, a strong Apple user base and wide cross-selling potential: payments, loans, deposits, ecosystem – everything fits together well.

What the exit means for Goldman Sachs

For Goldman, this is a point in the history of failure.

Terms and risks of the portfolio transfer

The most interesting thing is in the terms of the deal. The portfolio is leaving with a discount of more than $1 billion. Typically, such programs are sold at a premium of up to 8%, and for top brands – much higher. A discount on such a scale only happens when the asset is seriously problematic.

And this is exactly the case here. High share of subprime clients, overdue payments above the market average, increased risks of future write-offs. These factors scared off potential buyers for a long time and slowed down negotiations.

And there were many willing: American Express, Capital One, Synchrony Financial, fintech companies, private credit funds. Everyone was watching. Many refused.

In the end, it was JPMorgan that decided to take this risk. It will become a card issuer for new and existing customers. The transition will take time – as always in such transactions. In parallel, the bank plans to launch a new Apple savings account. Clients will be offered a choice: remain in the old configuration or switch to the JPMorgan platform.

How the Apple Card project developed

Now, a little history.

Goldman and Apple launched the card in 2019 to much fanfare. For Goldman, this was a symbolic step – entering the mass consumer segment, an attempt to become a “bank for everyone.” Diversification. Main Street.

The reality turned out to be much harsher: losses, regulatory pressure, lack of experience in retail lending. By the end of 2022, Goldman began to quietly, expensively and extremely painfully wind down this business.

Since 2020, the consumer business has generated more than $7 billion in pre-tax losses. Sale of GreenSky. Sale of General Motors loan program. All with losses. Apple Card remained the last and heaviest asset in this story.

They tried to implement this program for more than two years. And now she is leaving. With a discount. And, in fact, with relief.

Why JPMorgan is a logical partner for Apple

The irony is that Apple ended up getting exactly the partner it needed from the very beginning. JPMorgan knows how to manage scale, risk and retail lending. Goldman once decided that “banking is just banking.” Practice has shown the opposite.

The strategic takeaway

The result is simple.
For JPMorgan – a strong strategic step.
For Goldman – closing a chapter that it was better not to open.
And for the market – another reminder: consumer lending looks easy only on presentation slides. In reality, it breaks even the smartest.