Canadian Imperial Bank of Commerce agreed to sell about half its Aerogold Visa credit-card portfolio to Toronto-Dominion Bank, which is preparing to start its own Aeroplan rewards card in January.
Canadian Imperial will receive about C$3 billion ($2.9 billion) cash for the outstanding card balances, as well as an up-front payment of C$200 million from Toronto-Dominion and Aeroplan owner Aimia Inc., Toronto-based CIBC said today in a statement. Toronto-Dominion, which also agreed to pay CIBC C$37.5 million annually for three years, will acquire 550,000 cardholder accounts.
The companies had been in talks since last month, when Toronto-Dominion was chosen as the primary card partner of Montreal-based loyalty-program operator Aimia. Under its 10-year contract with Aimia, TD will offer a variety of co-branded Aeroplan Visa credit cards starting in January that offer miles for flights and other rewards.
Toronto-Dominion said the agreement will add about 10 cents a share to its adjusted earnings next year, and 15 cents in 2015, the bank said in a separate statement.
Canadian Imperials two-decade partnership with Aimia made the CIBC Aerogold Visa its most popular card. The bank buys Aeroplan miles from Aimia to give to cardholders on purchases, including flights with Air Canada, the countrys biggest carrier. Aimia, which owns and manages rewards programs including Nectar in the U.K. and Italy, counts CIBC as its biggest partner.
Aeroplan began in 1984 as a promotional tool for business travelers on Air Canada. CIBC Aerogold Visa was started in 1991, according to Aimia.