TD Bank Group to acquire Target's U.S. credit card portfolio
TORONTO-- TD Bank Group will acquire Target Corporation's existing U.S. Visa and private label card portfolio, with a current gross outstanding balance of US$5.9 billion. In addition, the two companies have entered into a seven-year program agreement under which TD will become the exclusive issuer of Target-branded Visa and private label consumer credit cards to Target's U.S. customers.
"Our agreement with Target will significantly expand our presence in the North American credit card business," said Ed Clark, Group President and CEO, TD Bank Group. "We're excited to be working with Target's strong team and leading retail brand. This asset purchase aligns perfectly with our risk profile and strategy, and will contribute to achieving our stated adjusted earnings target of US$1.6 billion from our U.S. P&C segment in 2013."
Target's REDcard Rewards program, which has been experiencing strong growth in usage, offers U.S. customers a 5% discount on Target purchases. TD will acquire over 5 million active Visa and private label accounts and will fund the receivables for existing Target Visa accounts and all existing and newly issued Target private label accounts in the U.S.
Under the terms of the program agreement, TD and Target will share in the profits generated by the portfolios, with Target having the more substantial interest. Target will be responsible for all elements of operations and customer service and will bear most operating costs to service the assets. TD will control risk management policies and regulatory compliance and will bear all costs related to funding the portfolio. In addition, TD will have a team on-site in Minneapolis to work with existing Target staff in overseeing the program.