VOL. 126 | NO. 159 | Tuesday, August 16, 2011
Bank of America to Sell Canadian Card Business
CHARLOTTE, N.C. (AP) – Bank of America Corp. plans to sell its $8.6 billion credit card business in Canada to TD Bank Group and will exit its credit card businesses in the United Kingdom and Ireland.
The moves are part of a broader shift by Bank of America out of its international credit card businesses. On Aug. 3, the bank agreed to sell its card business in Spain to Apollo Capital Management Inc. Bank of America also recently sold its U.K. business lending portfolio, and is exiting the depository institution affinity credit card business with the recent sales of the Regions and Sovereign credit card portfolios.
"While the credit card remains a fundamental core product for our U.S. customers, an international consumer card business under another brand is not consistent with that strategy," Bank of America CEO Brian Moynihan said.
The sale of Bank of America's card business in Canada transfers an $8.6 portfolio to Toronto-based TD Bank Group as well as certain other assets and liabilities.
TD Bank said in a news release that it will pay "a modest premium" on the portfolio, which goes by the name MBNA Canada. Bank of America added millions of names to its customer ledger when it acquired credit card issuer MBNA Corp. in 2006.
TD Bank said the deal will add 1.8 million active accounts to its existing 4 million. MBNA Canada is the country's largest MasterCard issuer.
"Acquiring this business makes TD a dual issuer of both Visa and MasterCard, giving customers greater choice," said Tim Hockey, president and CEO of TD Canada Trust.
The transaction is expected to close in the fourth quarter, subject to regulatory approval.
Bank of America also said it will exit its card businesses in the U.K. and Ireland, which have $19 billion in credit card loans combined, and more than 4,000 employees.
TD Bank said expects its transaction with Bank of America will add 5 cents to adjusted earnings per share in fiscal 2012, and add 10 cents to adjusted earnings per share in fiscal 2013.
Bank of America said the deal is expected to have a positive impact on its mandatory reserve, known as Tier 1 capital, but it did not specify how much of an impact.
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