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JPMorgan Chase in talks with Apple to take card from Goldman Sachs

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3 months ago

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Apple CEO Tim Cook introduces Apple Card during a launch event at Apple headquarters on Monday, March 25, 2019, in Cupertino, California.

Noah Berger | AFP | Getty Images

Apple is in discussions with JPMorgan Chase for the bank to take over the tech giant’s flagship credit card program from Goldman Sachs, a person with knowledge of the negotiations said.

The discussions are still early and key elements of a deal — such as price and whether JPMorgan would continue certain features of the Apple Card — are yet to be decided, said the person, who requested anonymity to discuss the nature of the potential deal. The talks could fall apart over these or other matters in the coming months, this person said.

But the move shows the extent to which Apple’s choices were limited when Goldman Sachs decided to pivot from its ill-fated retail banking strategy. There are only a few card issuers in the U.S. with the scale and appetite to take over the Apple Card program, which had saddled Goldman with losses and regulatory scrutiny.

JPMorgan is the country’s biggest credit card issuer by purchase volume, according to the Nilson Report, an industry newsletter.

The bank is seeking to pay less than face value for the roughly $17 billion in loans on the Apple Card because of elevated losses on the cards, the person familiar with the matter said. Sources close to Goldman argued that higher-than-average delinquencies and defaults on the Apple Card portfolio were mostly because the users were new accounts; those losses were supposed to ease over time.

But questions around credit quality have made the portfolio less attractive to issuers in a time when there are concerns that the U.S. economy could be headed for a slowdown.

JPMorgan is also seeking to do away with a key Apple Card feature known as calendar-based billing, which means that all customers get statements at the start of the month rather than staggered throughout the period, the person familiar with the matter said. The feature, while appealing to customers, means service personnel are flooded with calls at the same time every month.

Apple and JPMorgan declined to comment on the negotiations, which were reported earlier by the Wall Street Journal.

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Treasury yields were slightly higher early Friday after a mixed set of data on weekly jobless claims.

The yield on the benchmark 10-year Treasury was 3 basis points higher at 4.607%, slightly down from its peak earlier in the week but back above the 4.6% level it had not breached since May. The 2-year Treasury was fractionally higher at 4.334%.

One basis point is equal to 0.01%. Yields move inversely to prices.

After the Christmas break, jobless claims data released Thursday for the week ending Dec. 21 came in 1,000 lower at 219,000, below the 225,000 consensus forecast from Dow Jones.

However, continuing claims rose by 46,000 for the week ending Dec. 14 to the highest level since November 2021.

The 10-year Treasury yield has risen more than 40 basis points in December as traders anticipate a more hawkish Federal Reserve in 2025. The central bank next meets at the end of January, when a rate hold is expected.

Monthly data on wholesale inventories is due Friday.

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