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Goldman Sachs Considers Exiting Credit Card Partnership with Apple

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Geeta Pillai
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Goldman Sachs Considers Exiting Credit Card Partnership with Apple

The Wall Street banking titan, Goldman Sachs Group Inc., is contemplating terminating its credit card collaboration with tech behemoth Apple Inc., signaling a significant shift in the relationship between the two companies. This partnership, once considered a high-profile amalgamation of banking and technology, is on the brink of dissolution despite its contractual obligation to last at least five more years.

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Apple and Goldman Sachs: A Partnership in Peril

Apple has presented Goldman Sachs with a term sheet to initiate the process of contract termination. The winding up of this partnership, which encompasses both a credit card and savings account offering, could take between 12 to 15 months. This move comes amid Goldman Sachs' strategic reevaluation of its consumer banking business, as the firm seeks to offload its underperforming credit card operations.

Behind the Scenes of the Potential Severance

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Although the discussions surrounding this potential severance are private, the information has been disclosed by a source privy to the matter. The dissolution of this partnership would reflect a drastic change in the companies' relationship, which had been rocky in recent years. Goldman Sachs has faced scrutiny from regulators over its handling of refunds, billing errors, and allegations of gender discrimination in determining credit limits. The firm had earlier indicated that it would consider strategic alternatives for its consumer banking business.

The Implications for Apple and Goldman Sachs

For Apple, the credit card and savings account offerings add value and extra features to its iPhone, bolstering its rapidly expanding services business with additional fees. The tech giant is now faced with the task of finding a new financial partner for its popular Apple Card and high-yield savings accounts. Meanwhile, Goldman Sachs is presented with a potential exit opportunity from its struggling credit card business. The bank has been seeking to jettison this venture in light of the mounting costs and regulatory scrutiny.

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