Target Corporation announced an agreement to sell its entire consumer credit card portfolio to TD Bank Group. The price will be an amount equal to the gross value of the outstanding receivables at the time of closing. The consumer credit card portfolio currently has a gross value of approximately $5.9 billion. The transaction is expected to close in the first half of 2013.
The two companies also entered into an agreement for a seven-year program under which TD will underwrite, fund, and own future Target Credit Card and Target Visa receivables in the United States. The agreement will not impact Target’s 5% REDcard Rewards program. TD will control risk management policies and regulatory compliance under the program agreement.
Target will continue the current integration between its retail operations and its financial services operations. All servicing for Target Credit Card and Target Visa accounts will continue to be provided by Target team members. The program agreement and portfolio sale were designed to have a minimal impact on Target’s current cardholders and the team members supporting the financial products and services divisions.
The transaction is subject to regulatory approval and other customary closing conditions. Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation, said, “Target is very pleased to have reached this agreement with TD which is the result of extensive efforts by teams at both companies. This transaction achieves all of Target’s strategic and financial goals for a portfolio sale. We look forward to working with this premier global financial institution to continue Target’s long history of innovation in our guest-focused financial services strategy.”
Ed Clark, Group President and CEO of TD Bank Group, said, “Our agreement with Target will significantly expand our presence in the North American credit card business and will establish TD as a key player in this space. We’re excited to be working with Target’s strong team and leading retail brand. This asset acquisition aligns perfectly with our strategy, fits our risk profile and is a great complement to our high-growth credit card business.”