Four years after the Wall Street behemoth launched a credit card in collaboration with Apple (AAPL.O), Goldman Sachs (GS.N) is facing an expensive breakup from a relationship that other lenders deem too hazardous and unprofitable.
According to two people familiar with the situation who asked not to be named while discussing possible negotiations, Goldman will come under pressure from bidders to lower the value of its investment in order to increase the price when looking for a buyer for its portion of the partnership.
Goldman does not disclose the value of its ownership. Another setback for CEO David Solomon’s consumer strategy, which sought to diversify the bank’s revenue streams outside its customary core of trading and investment, is the anticipated termination of the Apple-Goldman collaboration.
Analysts suggested that the possible write-down on the Apple card would be the most recent in a run of losses stemming from Goldman’s disastrous entry into consumer banking. The financial specifics of the card industry are not broken out by Goldman in its results.
According to the two individuals, Apple will probably be pressured by potential bidders to alter the terms of the agreement.
They are probably going to try to get their hands on Apple’s exclusive credit card information, according to two other industry insiders. According to Apple’s website, no third parties are sold the data of its cardholders for marketing or advertising purposes.
According to the two individuals, credit card issuers including Capital One (COF.N), Citigroup (C.N), and Synchrony Financial (SYF.N) would be reasonable partners to take on the endeavor if terms are modified.
