From Reuters:
Under a seven-year agreement, TD will underwrite, fund and own future Target credit card and Target Visa receivables in the United States. TD will control risk management policies and regulatory compliance, while Target will keep handling account servicing functions.
TD Bank has agreed to pay an amount equal to the gross value of the outstanding receivables when the deal closes. The gross value is currently about $5.9 billion, according to Reuters.
The deal indicates that there is still some appetite for private label portfolios for retailers that are still underwriting their own credit lines or for banks that no longer find the market appealing. Last summer, HSBC sold the bank’s private label card portfolio to Capital One for an 8 percent premium.
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