follow us:Google+ FacebookLinkedInTwitterRSS Feeds

advertisement

TD acquiring Target's $6 billion credit card business

By

Back to Top Comments Email Print

Latest News

advertisement
TD Bank Group will acquire Target's credit card portfolio, which includes more than 5 million Target Visa and Target REDcard accounts. (Target.com)
TD Bank Group will acquire Target's credit card portfolio, which includes more than 5 million Target Visa and Target REDcard accounts. (Target.com)

TD Bank Group, which has U.S. headquarters in Cherry Hill, today said it will acquire Target Corp.'s entire credit card business for the portfolio's gross value — currently $5.9 billion — as well as exclusively underwrite and issue the retail giant's credit cards to U.S. consumers for seven years.

Under the agreement, TD will own more than 5 million Target Visa and Target REDcard accounts, though it will share profits generated by the credit card portfolio with Target, which will receive the greater share. Details of that split were not disclosed.

In a statement, TD CEO Ed Clark said the company's "agreement with Target will significantly expand our presence in the North American credit card business … (and) aligns perfectly with our risk profile and strategy."

The acquisition will help the bank achieve its 2013 adjusted earnings goal of $1.6 billion from its U.S. personal and commercial banking arm, Clark said.

After the deal closes, Target will manage operations and customer service and bear most of the service costs associated with the credit card accounts, while TD will handle risk management and regulatory compliance, and cover all costs related to funding the portfolio. To oversee the program with Target, TD will establish an on-site team at the retailer's Minneapolis headquarters.

In a statement, Gregg Steinhafel, Target chairman, president and CEO, said the transaction is "the result of extensive efforts by teams at both companies … (and) achieves all of Target's strategic and financial goals for a portfolio sale."

Pending regulatory approvals and customary conditions, the transaction is expected to close in the first half of 2013.

Target sought a buyer for the deal on and off for nearly two years, as the discounter first announced its intention to sell its credit card business in January 2011.

In an e-mail, Michael Rhodes, TD executive vice president of North American credit cards and merchant services, said the bank’s private-label credit card business “has been around for decades,” though he noted “we have a lot of opportunity to build on this foundation and grow even further.”

“The relationship with Target will significantly expand TD’s card presence in the U.S. … (and) we will continue to expand in both private-label and general-purpose cards,” Rhodes said. “We view this category as a growth platform for TD.”

Last year, TD bought the credit card portfolio of Canada-based MasterCard issuer MBNA from Bank of America Corp.

Share This Story On:

Write to the Editorial Department at editorial@njbiz.com

advertisement

Comments


Be the first to comment.



Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
     View Comment Policy

Advanced search
Sponsored by
advertisement
  
  
advertisement
  
  
advertisement
Back to Top