By Cameron French
TORONTO Aug 26 Canadian Imperial Bank of
Commerce and Toronto-Dominion Bank have extended
talks on a deal for CIBC to retain about half of its Aeroplan
credit card portfolio, with TD getting the rest.
The two banks, Canada's top two credit card issuers, had set
Monday as a deadline to hammer out a deal with Aeroplan program
owner Aimia Inc for the two splitting the portfolio
essentially down the middle.
Earlier this year, TD, Canada's No. 2 bank in terms of
assets and market capitalization, replaced CIBC as the issuer of
the popular flight rewards card. CIBC, Canada's No. 5 bank, had
been the main issuer for more than 20 years, but failed to reach
agreement with Aimia to extend their partnership, which expires
on Dec. 31.
In June, TD swooped in to make a deal with Aimia to replace
CIBC, but the banks said earlier this month they were working on
a compromise to split the portfolio down the middle.
CIBC would retain its card customers that have other
products with the bank, while TD would acquire the remainder.
"The parties will make an announcement when an agreement has
been reached or when the discussions have concluded without an
agreement," TD said on Monday.
Customers who use the Aeroplan card can accumulate points to
travel on Air Canada and its partner airlines, or buy
Analysts estimate the card produces more than 10 percent of
HOT CARD SPACE
The deal is one of several in the Canadian credit card
sector over the last few years, as Canadian banks seek ways to
boost revenue in the face of slowing consumer loan growth and a
cooling housing sector.
"If you look at credit cards in general, they're just more
profitable than what you're going to find with traditional
consumer lending," Tom Lewandowski, an analyst with Edward
Canadian banks are due to begin reporting third-quarter
results this week, starting with Bank of Montreal on
Tuesday. TD and CIBC report on Thursday.
TD has been aggressive in adding credit card assets, buying
Bank of America Corp's MBNA Canadian credit card
business in 2011 and purchasing Target Corp's U.S.
credit card portfolio earlier this year.
Canada's big banks escaped the 2008 financial crisis with
little damage, and have been expanding both internationally and
But consumer loan growth, their biggest revenue segment, has
begun to slow along with the housing market, and a recent rise
in mortgage rates may exacerbate that trend.
While credit card loans are considered riskier than the
mortgages that make up the bulk of Canadian bank loan books,
they boast more lucrative rates.
Shares of CIBC were up 1.1 percent at C$80.73 on the Toronto
Stock Exchange. TD added 0.8 percent at C$89.50. Aimia rose 7
Canadian cents at C$15.88.