TORONTO, Dec. 27, 2013 /CNW/ - CIBC (TSX: CM) (NYSE: CM) announced today it has completed the transactions with Aimia and TD Bank Group that were announced on September 16, 2013.
CIBC has sold approximately 50 per cent of its existing Aerogold VISA portfolio, consisting primarily of credit card-only customers, to TD Bank Group. Consistent with CIBC's strategy to invest in and deepen client relationships, CIBC has retained the Aerogold VISA credit card accounts held by clients with broader banking relationships at CIBC. In connection with today's sale, CIBC and Aimia have entered into a 10-year agreement under which CIBC will continue to be an issuer of Aeroplan related travel credit cards and CIBC Aerogold clients will benefit from Aeroplan's enhanced rewards program.
As consideration for the sale, CIBC has received approximately $3.5 billion, representing the amount of the credit card receivables from the sold portfolio (being approximately $3.3 billion) plus $200 million, of which $50 million was paid by TD Bank Group and the balance was paid by Aimia. In addition, CIBC will receive payments from TD Bank Group of approximately $37.5 million per year in each of the next three years.
The closing of the transaction does not trigger any immediate changes for existing cardholders.Current CIBC Aerogold Visa cardholders will receive a letter from CIBC informing them whether their credit card account will remain with CIBC or will be transitioning to TD. Under the interim servicing agreement between TD and CIBC, cardholders transitioning to TD will continue to earn Aeroplan Miles on purchases and will continue to be serviced by CIBC until new TD cards are issued. All Aeroplan Miles reside in a member's Aeroplan account and are not impacted by any change to their credit card.