JPMorgan Chase has agreed to take over the loans underpinning Apple’s credit card portfolio from rival Goldman Sachs, extricating it from one of the last businesses related to an ill-fated foray into retail banking.
“This transaction substantially completes the narrowing of our focus in our consumer business,” said Goldman chief executive David Solomon in a statement.
The Apple credit card had about $20bn in loans and JPMorgan would pay a roughly $1bn discount to the par value of the portfolio, according to a person familiar with the matter. Apple and JPMorgan will also work together on an Apple-branded savings account.
Moving the portfolio over to JPMorgan, the largest US bank with more than $4tn in assets, will be a test of the relationship between two of the biggest names in corporate America.
Apple often sets demanding terms in its business partnerships, while JPMorgan chief executive Jamie Dimon has repeatedly called out the iPhone maker as an emerging competitor as banking becomes increasingly digital.
Under Tim Cook, Apple has built out its offering of financial services to include payments, digital wallets and lending. Dimon said in 2023 that Apple was “becoming a bank”. The talks between Apple and JPMorgan have been going on for more than a year.
JPMorgan’s Allison Beer, who runs Chase card business, said the bank was “excited to innovate together in the future” with Apple.
At the end of September, JPMorgan had about $235bn in credit card loans and is the second-largest lender in the more than $1tn US credit card industry, behind Capital One.
The deal will take about two years to close. Goldman said the sale would boost its fourth-quarter results, due to be reported next week, through the release of about $2.5bn in reserves for possible loan losses.
Apple and Goldman announced the partnership in 2019 as a landmark deal for the bank, which committed to building an entirely new credit card infrastructure tailored to the Big Tech company’s needs.
Goldman’s retail banking business, branded Marcus, proved unpopular with investors and racked up billions of dollars in losses. That led to Solomon’s decision to dramatically scale back the effort in late 2022.
Goldman had already agreed to move its other credit card partnership with General Motors to Barclays in 2024.