VSeveryone has their own destiny. That of Marcus Goldman, a young German Jew who emigrated to the United States in 1848, was to create, in 1869, a company specializing in the trading of debt securities, commercial paper and the financing of entrepreneurs. This is still what makes the bank so powerful, more than a century and a half later. But success does not satisfy. The distant descendants of the founders were missing something to make Goldman Sachs a truly large bank comparable to the giants JPMorgan Chase or Citigroup: a mainstream activity. The Wall Street bank also wanted to be the one down the street.
This is why the business and investment bank launched into the adventure of bank accounts, credit cards and real estate loans in 2016. An ambition amplified by David Solomon, who arrived at the helm in 2018, adept at technology, playing disc jockey on weekends at major music festivals. To symbolize his commitment, he chose the most prestigious company of the new digital age, Apple, to launch, in 2019, a card decorated with the famous apple.
Four years later, the failure was recorded and divorce proceedings initiated. According to Wall Street Journal, Apple sent Goldman Sachs a proposal to exit their contract in the next twelve to fifteen months. Separately, the New York bank said it would terminate its other credit card deal with General Motors and put its home improvement loan business up for sale.
Misunderstanding
Marcus Goldman’s bank will not be the equal of that of John Pierpont Morgan. The affair was already off to a bad start from the start. Many executives wondered whether it was appropriate for the company to launch into a business known to be as costly as it was unprofitable. In addition, it started with a misunderstanding with Apple, when the latter proclaimed, with great publicity, that it was offering its customers the first card without a bank.
Reduced to the rank of a simple service provider, Goldman Sachs quickly understood that the margins went to California when the losses of unscrupulous clients ended up in New York. Since 2020, the firm has lost nearly 3 billion dollars (2.7 billion euros) in this diversification. Very expensive to buy respectability among American consumers.
The king of trading and IPOs therefore returns to his original profession when Apple must urgently find a successor to enrich its service offering, which has become its main growth pole in the face of the decline in sales of its iPhones. .