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.
CIBC will offer a new suite of Aeroplan co-branded credit cards, providing members with great earning opportunities through the Aeroplan program, plus the same Air Canada benefits on select card products. These are in addition to the benefits that will be available under Aeroplan's Distinction member recognition program that offers exclusive flight rewards, bonus mile offers, preferential treatment and privileges.
CIBC Aerogold Cardholders can access more information at www.cibc.com/aeroplan or call 1-855-366-8501.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of securities laws in Canada and the United States. These statements include, but are not limited to, statements about closing conditions, requirement for regulatory approval, our operations, cards business, financial condition, annual earnings impact, risk management, ongoing objectives, strategies and outlook. Forward-looking statements are subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond our control, could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements including, higher than anticipated costs to launch an enhanced proprietary travel card; lower than anticipated interchange rates and card usage; industry competition; changes in network rules; credit and market risks; changes in market rates and prices; and our ability to anticipate and manage the risks associated with these factors. We do not undertake to update any forward-looking statement except as required by law.
CIBC is a leading North American financial institution with more than 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.