Toronto-Dominion Bank (NYSE:TD) on Tuesday announced that it would acquire Nordstrom Inc.’s. (NYSE:JWN), U.S VISA® and private-label consumer credit card portfolio. The transaction is part of a long-term deal to become the retailer’s exclusive U.S. credit card issuer.
The retailer’s existing portfolio totaled about $2.2 billion in receivables. Terms of the purchase were not disclosed. The deal is expected to close in the second half of 2015.
Nordstrom will continue to perform account-servicing for the portfolio.
This is not the first U.S. credit card portfolio acquisition for TD Bank nor the first where a seller retained servicing rights. In March of 2013, TD Bank completed the acquisition of Target’s(NYSE:TGT) credit card portfolio for $5.7 billion. As in the subsequent Nordstrom transaction Target retained servicing rights to the portfolio.
The right to retain servicing on the portfolios is not surprising given the Nordstrom and Target reputations for customer service and customer loyalty.
Under the announced terms of both transactions, both Target and Nordstrom will continue to earn a “substantial portion” of the profits generated by the credit card portfolios.