TD Bank has signed a deal to acquire U.S. retailer Nordstrom's existing U.S. Visa and private label consumer credit card portfolio, which totals roughly $2.2-billion (U.S.) in receivables.
The bank has also signed an agreement to become the exclusive U.S. issuer of Nordstrom-branded Visa and private label consumer credit cards to Nordstrom customers.
Under the arrangement, Nordstrom, which operates 304 stores in 38 states and in Canada, will continue to perform account servicing functions. The retailer will also continue to fund and manage the Nordstrom Rewards loyalty program, Nordstrom debit cards and Nordstrom employee accounts.
This is the second U.S. card deal within three years for the Toronto-based bank, which acquired $5.7-billion of card balances from Minneapolis-based retailer Target Corp. in March 2013. The Nordstrom deal is expected to be completed in the second-half, the firms said.
"TD is following a well-worn path in its acquisition of credit-card portfolios and we have little doubt that the Nordstrom acquisition and strategic partnership will bear fruit," John Aiken, a Barclays PLC analyst, said in a note to clients. "The acquisition of assets in the U.S. provides for more optimal deployment of its surplus liquidity."
"We found TD to be a strong cultural fit, sharing our customer-focused approach and providing capabilities to help us further enhance the customer experience," Nordstrom Co–President Blake Nordstrom, 54, said in the statement.
Toronto-Dominion, which has bought about $17-billion (Canadian) of card assets in Canada and the U.S. since 2011, is Canada's largest credit-card issuer by outstanding balances, according to industry newsletter Nilson Report.
Nordstrom opened its first store in Canada last year in Calgary.
-With files from Bloomberg