Target to sell credit card business to TD Bank
NEW YORK (AP) — Target Corp. on Tuesday said it reached a deal to sell its entire consumer credit card business to TD Bank Group, ending an almost two-year search for a buyer.
The discounter, based in Minneapolis, said the sale price is equal to the gross value of the outstanding receivables at the time of closing. Target's portfolio currently has a gross value of about $5.9 billion.
The two companies also entered into a seven-year pact under which TD Bank will underwrite, fund and own future Target credit card and Target Visa receivables in the U.S.
As part of the agreement, TD Bank, based in Toronto, will control risk management policies and regulatory compliance and Target will continue to perform account servicing functions. That means TD Bank will make decisions about things like which applications are accepted and what interest rates are charged to customers, for example, while Target still handles bill processing and customer service issues.
Target said the agreement doesn't have any impact on Target's Red Card credit card holders, who receive a 5 percent discount on purchases.
The transaction, subject to regulatory approval, is expected to close in the first half of calendar 2013.
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