TD, CIBC reach deal on migrating Aeroplan credit card portfolio

TORONTO – TD Bank Group (TSX:TD), Canadian Imperial Bank of Commerce (TSX:CM) and Aimia Inc. (TSX:AIM) have settled on a compromise covering the Aeroplan loyalty credit card programs.

As a result of the agreement, each bank will have rights to half the porfortio of accounts that offer their customers loyalty points that can be exchanged for airline tickets and other goods through Aimia’s flagship Aeroplan program.

“The agreements we are announcing today with TD and CIBC will put real momentum behind the transformed Aeroplan program we will launch in January and provide a strong and stable platform for growth in the Canadian business,” said Rupert Duchesne, group chief executive for Aimia.

“Having these agreements in place will also preserve the financial flexibility to invest in the growth opportunities we might see for Aimia over the next few years.”

TD said it expects to acquire approximately 550,000 cardholder accounts from CIBC, representing approximately $3 billion in card balances and $20 billion in annual retail spending.

CIBC will retain the half of the portfolio that includes Aerogold customers with broader relationships with the bank, which has been the primary Aeroplan credit card issuer for more than 20 years.

The three companies have been in negotiations for weeks, following Aimia’s decision to pick TD as the primary issuer of Aeroplan Visa credit cards for a 10-year term, starting Jan. 1, 2014.

CIBC objected to the decision and the three parties agreed to seek a compromise agreement.

Aimia says about $312.5 million will be paid to CIBC for the shift of half its Aeroplan cards portfolio to TD, with Aimia funding about $150 million of the payments.

TD will pay $162.5 million, including $50 million when the deal closes. The rest will be paid over three years — about $37.5 million annually.

CIBC says it also plans to introduce an enhanced travel loyalty rewards card.

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