JPMorgan Chase & Co (JPM.N) and Apple Inc (AAPL.O) are discussing a deal that would see JPMorgan take over Apple's credit card program after its partnership with Goldman Sachs Group Inc (GS.N) fell apart, the Wall Street Journal reported on Tuesday.
While talks between JPMorgan and Apple have reportedly progressed in recent weeks, there is no guarantee a deal will be reached as key details of the transaction, such as price, have not yet been finalized.
If the deal goes through, investors could add Apple's credit card to a list of projects JPMorgan has taken on in recent years that needed to find new owners in an emergency.
The transaction involves a business with an outstanding balance of about $17 billion and 12 million users currently held by Goldman Sachs. JPMorgan Chase, already a credit card giant, is more familiar with mass-market customers than Goldman Sachs and may take over the business.
Spokespeople for JPMorgan and Goldman Sachs declined to comment to Barron’s, and Apple did not respond to a request for comment.
If JPMorgan Chase becomes an issuer of the Apple Card, it would mark a different type of rescue operation for the bank, different from its past rescues of troubled banks. JPMorgan Chase took over the acquisition of First Republic Bank during the regional banking crisis in the spring of 2023, a move reminiscent of JPMorgan Chase's acquisitions of Bear Stearns and Washington Mutual during the 2008-2009 financial crisis.
Of course, Apple's credit card is not a bank on the verge of collapse, but it does need help after a failed partnership. Apple's partnership with Goldman Sachs began in 2019 and ended in 2023. Many problems have arisen in the relationship between the two.
The Wall Street Journal reported in November that Apple required cardholders to receive their statements at the beginning of the month, which caused Goldman's customer service staff to deal with a large number of calls from cardholders. In addition, Apple also pushed for almost all applicants to be approved, which caused more losses for Goldman.
Goldman Sachs has abandoned plans for a consumer business it announced eight years ago after a costly and high-profile turmoil in its aggressive push into mass lending, which included its Marcus-branded investment accounts that it has now sold.
JPMorgan Chase & Co. would become even more powerful if it becomes an issuer of Apple's credit card, a move that would raise concerns among critics who want to curb the power of big banks while satisfying JPMorgan shareholders who have reaped the rewards of absorbing new business over decades.
Article forwarded from: Jinshi Data
