In early December, a long-delayed deal hung over a call between JPMorgan Chase Chief Executive Jamie Dimon and Goldman Sachs CEO David Solomon.
Executives at the two banks had been negotiating for months on trading the massive Apple credit-card program and its roughly $20 billion in balances, but the talks had stalled. Privately, bankers on each side were blaming the other for needlessly slowing down the negotiations.
JPMorgan had secured a discount on the balances to help cover potential losses, but had wanted more protection in case the loans grew worse. Goldman executives, meanwhile, didn’t feel the need to bend much now that the Apple program was finally looking profitable.
Some executives on both sides had started questioning whether to walk away.
Dimon and Solomon got on a call on Dec. 8, according to people familiar with the matter. They discussed why the Apple deal was taking so long to close and agreed to break the logjam to see the deal through soon, the people said
Just before the New Year, the banks finalized a deal that was announced last week, confirming The Wall Street Journal’s earlier report.
The deal brings two of the country’s most influential companies closer together. JPMorgan is adding the flashy program to its leading credit-card operation and strengthening its connections to the trillion-dollar tech giant at a time when consumers are increasingly using phones and watches for payments and managing their finances. Apple gets a new partner with a sprawling consumer base that is eager to grow the card. Goldman gets closure on its failed venture into consumer lending that has brought the firm billions of dollars in losses, a chapter it is hoping to forget.
Moving the Apple credit card was never going to be simple. Card programs this big aren’t put up for sale often and few potential buyers exist. Apple is famously finicky about details and control, including with its credit card. Before launching the program in 2019, Goldman and Apple agreed to unusual terms that other banks balked at taking over. Interested executives were especially worried about higher-than-normal delinquencies and subprime exposure and wanted huge discounts to consider a deal.
Even still, almost nothing about the process of finding a bank to replace Goldman has been normal. To begin with, Goldman began looking to exit from the contract with Apple only a few months after it had extended its partnership with the tech giant to the end of the decade. Apple and Goldman had discussions with large and smaller credit-card issuers—American Express, Capital One, Synchrony, Barclays and Santander—as well as tiny fintechs. Apple even debated bringing in private-credit firms to help a smaller card-issuing entity take over.
The talks took longer than expected. Goldman had wanted an announcement, and closure on its painful consumer chapter, by the early summer. By October, the delay was so pronounced, Goldman executives faced public questions from analysts on if the deal was ever coming.
Solomon’s response didn’t suffice for Wells Fargo’s Mike Mayo, who followed up by needling the investment bank.
“I guess I’m just wondering why you’re the leading dealmaker in the world, and that’s still hanging around,” Mayo said.
In the end, the most likely buyer was always JPMorgan, the nation’s biggest bank. It has the capital and card experience, including underwriting a swath of consumers, to swallow the program and ambitions to be closer to Apple and its core customer.
The story of the triangle of negotiations between the giants of corporate America and why Apple and Goldman struggled to break apart their partnership is compiled from interviews with 20 people familiar with the matter and reporting over months of their negotiations.
An unhappy marriage
Immediately after Goldman and Apple launched the card, rival issuers looked with raised eyebrows at some of the terms, foreshadowing issues that would come up in the deal talks in recent years.
Apple, used to high consumer-appreciation marks, wanted Goldman to approve nearly all applicants. The result was a program with higher-than-normal exposure to subprime borrowers, which required Goldman to sock away more revenue for potential future defaults.
The tech giant didn’t want late fees, removing a key credit-card issuer revenue generator. And Apple insisted all cardholders get their bills at the beginning of the month, in what would become a customer-service nightmare.
In 2022, Apple and Goldman extended their partnership through 2029.
But shortly afterward, Goldman started looking for an exit, The Wall Street Journal reported. In 2023, Goldman spoke with American Express to gauge its interest in taking over the program, the Journal reported.
Later that year, Apple decided it wanted out and sent a proposal to Goldman to exit from the contract within roughly 12 to 15 months, the Journal reported.
Apple began making the rounds and distributed a glossy pitch deck to card issuers that was light on numbers but not on pride. The presentation said Apple was the best company, with access to every household in the U.S., and that it wanted to build the best credit card, according to payments executives who saw the pitch.
The tech company told one firm that it and Goldman were in an unhappy marriage. It said the two companies were willing to stay together, but no one likes being married to someone who doesn’t want to be married to them.
The two were also trading barbs over regulatory issues that they were facing behind the scenes. During a Consumer Financial Protection Bureau investigation, which concluded with an enforcement action against both companies in late 2024, Goldman and Apple blamed each other to bureau officials for some of the regulator’s findings.
Looking under the hood, issuers found reasons to hesitate. North of 30% of the balances have been tied to people with credit scores below what most lenders define as prime, higher than other large banks that specialize in subprime borrowers.
Still, several banks, including JPMorgan, were enticed by the success of the card’s reach and the Apple brand, which has become the epicenter of more consumers’ financial lives.
One potential solution Apple, Goldman and interested card issuers explored was using a private-credit fund to take on the balances. Those lenders have increasingly been turned to for complex bespoke financing deals across Wall Street and have backed consumer lenders, but a deal this big and complex would have been new ground.
Apple approached a boutique investment bank to help find a fund and approached a small fintech company about a deal with a private-credit partner.
Goldman bankers reached out to private-credit firms to gauge their interest and Barclays, considering its own bid, approached KKR about arranging a deal to help.
Tense negotiations
Heading into 2025, Goldman executives were hoping that Apple would make a decision on who would be the card issuer by around early March. The winner would then engage in talks with Goldman.
That didn’t happen. Goldman executives felt that the process was dragging on because Apple wasn’t following through on what it needed to do.
Apple didn’t seem very close. At one point Apple was writing three separate contracts with JPMorgan, American Express and Synchrony. Card-issuer executives were flying to Apple’s headquarters in Cupertino sometimes within days or weeks of each other.
Looking for still more bidders, Apple pinged Capital One and said a deal was imminent but it had one last chance to get in. The bank said it would be busy integrating its purchase of Discover Financial, though an executive did take a meeting.
Synchrony was convinced it was getting the deal and started exploring how to make the card turnover as low-cost as it could.
By May, Apple told JPMorgan that it was its preferred partner.
Still, Murray Abrams, one of Capital One’s most senior executives, met with Goldman around early June. Privately, Capital One executives viewed Apple’s outreach as an attempt by the tech giant to try to squeeze more favorable terms out of JPMorgan.
With Apple playing middleman between Goldman and JPMorgan on the price, a tentative agreement was struck that the portfolio would move at a roughly 7% discount on the outstanding Apple credit-card balances. That would mean that Goldman would take a more than $1 billion haircut.
JPMorgan was also seeking more protection in the event the card delinquencies spiked or performance deteriorated in the period after the banks signed the contract. The program will take roughly two years to move from Goldman to JPMorgan, and the latter wanted as much of an assurance as possible that the portfolio it would eventually take on would be what it signed up to buy.
JPMorgan wanted the ability to walk away before the deal closed, a make-or-break item for the JPMorgan team that negotiated the deal.
Bill Johnson, who has been overseeing the credit-card operation at Goldman, called JPMorgan saying such a clause wasn’t needed.
Ultimately, the protection clause was included in the deal.
Throughout the negotiations, Goldman has been trying to hold on to enough staff to keep the program running. More than a year ago, Johnson told employees that those who stay until the last day of the Apple program will be eligible for a lump-sum payment equal to their 2023 compensation.
With a deal finally in hand, Goldman plans to shut down Platform Solutions, which housed the bulk of its consumer-lending ambitions. When Apple eventually moves to JPMorgan, Goldman’s consumer-lending journey will be over.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com