Goldman Sachs consumer lending business may come to an end! Considering terminating partnership with Apple, American Express may "take over"

Goldman Sachs is considering terminating its partnership with Apple. According to sources, Goldman Sachs is in negotiations with American Express to take over its Apple credit card and other collaborations with Apple. The discussions have been ongoing for several months.

Following the announcement, there was minimal fluctuation in Goldman Sachs' stock price. Goldman Sachs closed down 0.17% on Friday and slightly increased after hours.

Goldman Sachs and Apple first collaborated in 2019 to launch the credit card. In October of last year, Apple announced a new high-yield savings account for users of the card in partnership with Goldman Sachs. At the same time in October, Goldman Sachs CEO David Solomon stated that the consumer finance partnership with Apple had been extended until the end of 2029, expressing support for Apple's "buy now, pay later" service. Solomon remarked, "This is a very, very strong partnership with many opportunities."

However, the situation has since changed rapidly. Goldman Sachs publicly announced plans to scale back its consumer business, but at the time, it seemed committed to maintaining its relationship with Apple.

The transfer of Goldman Sachs' partnership with Apple to American Express is not an immediate or definite occurrence. Regardless of the outcome, such a transfer may take some time. Apple must agree to the transfer, and sources indicate that Apple is aware of this.

In addition to ending its partnership with Apple, Goldman Sachs has made a series of exits. These include: ending negotiations with T-Mobile to jointly launch a credit card and abandoning bids for new projects; discussing the transfer of its credit card partnership with General Motors to American Express or other institutions; ceasing personal loans; and attempting to sell GreenSky, a home improvement loan company acquired for $2.24 billion just last year.

These series of exits by Goldman Sachs signify the substantial end of its consumer lending business and indicate the failure of its grand plan to become a comprehensive service bank.

For many years, Goldman Sachs has been renowned for its Wall Street investment banking and trading operations. In 2016, this elite bank ventured into mainstream consumer and retail banking with its Marcus high-yield savings account, marking its official entry into consumer lending and retail banking.

If Goldman Sachs exits the credit card business and sells GreenSky, its consumer business will be reduced to its original product: the Marcus savings account. Goldman Sachs has stated that it has no plans to stop accepting consumer deposits.

Behind Goldman Sachs' withdrawal from most of its consumer business lies significant losses the bank has faced in this sector. Earlier this year, Goldman Sachs Group revealed that a substantial portion of its retail lending business had incurred losses of over $3 billion since 2020. This is the first time Goldman Sachs has disclosed the costly price it has paid in its foray into retail banking.

Specifically, in the nine months ending September 2022, Goldman Sachs' Platform Solutions division incurred a loss of $1.2 billion. After factoring in operating expenses and provisions for potential loan losses, the division's losses in 2021 slightly exceeded $1 billion. In 2020, the losses amounted to $783 million. In recent years, CEO Solomon has been dedicated to accelerating the expansion of Goldman Sachs' consumer banking business, which has caused increasing dissatisfaction among senior executives within the firm. According to an article on the Wall Street CN website, the substantial losses in Goldman Sachs' consumer lending business have impacted the bonuses of other departments. Although Solomon publicly admitted his mistake in transitioning to consumer finance, some senior executives at Goldman Sachs, including managing partners, privately hope for further accountability for Solomon.