Impact of TD’s Purchase of BOA’s Credit Card Portfolio?
On Monday, Toronto Dominion Bank (TD) agreed to acquire the Canadian portfolio of Bank of America (BOA) Corp. The deal will give TD 1.8 million new accounts and more than double the size of its Canadian credit card business to a staggering $16.7B. It also accelerates TD’s plans around card duality, since this new Portfolio is MasterCard branded. That brings TD full circle, who were forced to sell their MasterCard portfolio back in 2000 when they acquired Canada Trust.
So what does this mean for the Canadian credit card business? The bigger question is, what does this mean for the members of Canada’s credit unions? The reality is that MBNA a subsidiary of Bank of America acquired the Regina-based CUETS in 2007. CUETS Financial is the primary supplier of MasterCard credit cards issued in Canada, providing services to credit unions and caisses populaires. CUETS provide credit unions an agency program, were the credit unions receive a revenue share, but do not own the receivables or more importantly the customers. That’s right; TD through this acquisition now has access to a vast proportion of Canada’s Credit Union member for potentially marketing TD products such as insurance, banking and investments. It is likely that TD will integrate the Canadian MBNA operation in to it extensive credit card infrastructure and customer service operations. In doing so, CUETS customers will likely see changes over time, perhaps around the bundled services like creditor insurance and rewards.
One positive piece of news is that MBNA card holders should see access to using their card in Cuba restored. This was a limitation of the MBNA US ownership with handling controls set by the US Fed.
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