TD Bank, CIBC reach deal on Aeroplan Visa card

Mon Sep 16, 2013 4:15pm EDT
 
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By Cameron French

(Reuters) - Toronto-Dominion Bank TD.TO agreed on Monday to buy about half of Canadian Imperial Bank of Commerce's CM.TO Aeroplan Visa V.N credit card portfolio in a deal that will see both banks issue the popular and lucrative rewards card.

The agreement, which drove shares of Aeroplan loyalty program operator Aimia AIM.TO to a five-year high, averts a potential legal battle between the two banks and also eliminates uncertainty over the future of the card that could have seen customers flee to other banks.

"It's safe to say that TD is the winner from this (of the two banks)," said Gavin Graham, chief strategy officer at Integris Pension Management Corp.

TD, Canada's second-largest bank, will pay C$162.5 million ($157.59 million) to CIBC to acquire about 550,000 cardholder accounts, representing about C$3 billion in card balances and C$20 billion in annual retail spending, TD said. It will also become the card's primary issuer.

CIBC, the country's No. 5 lender, will receive an additional payment from Aimia and will keep the remaining 630,000 Aeroplan accounts held by existing banking customers. It will also continue to issue the card under the 10-year deal.

RESOLVES AEROPLAN BATTLE

The deal resolves a months-long battle for control of the lucrative Aeroplan card, which allows customers to earn points that can be cashed in for flights on Air Canada ACb.TO and its partner airlines, as well as other goods.

CIBC has been the card's main issuer for more than two decades, but lost that role earlier this year, after Aimia could not come to terms on an extension with CIBC and instead entered into a partnership with TD.   Continued...