This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

CIBC Confirms Agreements With Aimia And TD Bank Group

TORONTO, Sept. 16, 2013 /CNW/ - CIBC (TSX: CM) (NYSE: CM) announced today it has reached tri-party agreements with Aimia and TD Bank Group.

Under the terms of the 10-year agreement with Aimia, CIBC will continue to be an issuer of Aeroplan related travel credit cards. This agreement ensures that CIBC Aerogold VISA clients will continue to earn Aeroplan miles as usual and will benefit from the enhanced Aeroplan program starting January 2014.

CIBC will sell approximately 50 per cent of its existing Aerogold VISA portfolio to TD, consisting primarily of credit card only customers. Consistent with its strategy to invest in and deepen client relationships, CIBC will retain the Aerogold VISA credit card accounts held by clients with broader banking relationships at CIBC.

Key Financial Terms

The portfolio being divested by CIBC consists of approximately $3 billion of credit card receivables. Upon closing, CIBC will receive a cash payment from TD that will be equal to the approximately $3 billion in credit card receivables outstanding being acquired by TD. 

CIBC will also receive upon closing, in aggregate $200 million in upfront payments from TD and Aimia as well as annual payments from TD of approximately $37.5 million per year in each of the 3 years after closing.

In addition to these amounts, CIBC will release approximately $65 million of loan loss provisions related to the sold portfolio, and incur approximately $55 million in costs, $25 million on closing and $30 million over the next four quarters. The net income of the upfront payments, loan loss release and closing costs is expected to be approximately $180 million.

CIBC will also free up approximately $280 million of regulatory capital related to the reduction of credit card receivables.

Based on current levels of profitability, the annual earnings impact of the agreements being announced today is a reduction of approximately $0.45 per share on an ongoing basis.

Separate from the tri-party agreements announced today, CIBC will also continue with its plans to introduce an enhanced proprietary travel loyalty rewards card. As previously disclosed, CIBC will spend approximately $50 million related to this launch, of which approximately $30 million will be in fiscal 2013 and the remainder will be spent in 2014.

Key Agreement Terms

Under the terms of this agreement:
  • CIBC will continue to have rights to market the Aeroplan program and originate new Aerogold cardholders through its CIBC branded channels.
  • The parties have agreed to certain provisions to compensate for the risk of cardholder migration from one party to another. There is potential for payments of up to $400 million by TD/Aimia or CIBC for migration of Aeroplan credit card accounts.
  • The CIBC and Aimia agreement includes an option for either party to terminate the agreement after the third year and penalty payments due from CIBC to Aimia if holders of Aeroplan credit cards from CIBC's retained portfolio switch to other CIBC credit cards above certain thresholds.
  • CIBC will work with TD under an interim servicing agreement to effect a smooth transition of the customers moving to TD.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs