Target agreed to sell its credit card portfolio to Toronto-Dominion Bank, nearly two years after the retailer said it wanted to unload the business, according to a report from Reuters.
When the deal closes, TD will pay an amount equal to the gross value of the outstanding receivables — valued at $5.9 billion — after having signed a 7-year agreement to be the exclusive issuer of Target-branded Visa and private-label cards in the United States.
The deal gives Toronto-based TD, the sixth-largest bank in North America, a way to expand its credit card portfolio, also allowing Target to cut debt as it expands retail operations, according to the report. Under terms of the deal, Target will keep earning a substantial portion of profits generated by its credit card and Visa portfolios. While still subject to regulatory approval, the deal is expected to be completed during the first half of 2013.
"We have a great product," Terry Scully, Target's president of financial and retail services, told the Star Tribune. "There's no question the portfolio is performing well. But we are a retailer. [The credit card business] exists to support retail sales."
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