TD, CIBC still discussing Aeroplan credit card deal

TD Bank Group said Monday that it has not yet reached a deal with CIBC and Aimia that would see the banks both offering credit cards linked to the Aeroplan loyalty points program but that talks are continuing.

Earlier this month, TD took over from Canadian Imperial Bank of Commerce as the main banking partner for Aeroplan after CIBC and Aimia, the company  that operates the reward points system, could not agree on the terms of the renewal of CIBC's contract.

CIBC had been the main credit card partner for Aeroplan for 22 years through its Aerogold Visa card but could not match TD's competing offer for the Aeroplan contract, which will see the bank pay Aimia $100 million up front and increase the amount it gets per travel mile sold by 15 per cent.

Following the confirmation of the TD deal, Aimia said it might be possible for both banks to offer credit cards with Aeroplan points if they came to an agreement.

A deadline of Aug. 26 was set for a deal among the three parties, but today, TD announced talks were ongoing.

TD said Monday the three parties were discussing a scenario whereby CIBC would keep the cards held by its franchise banking customers, which amount to about half of its Aeroplan portfolio, and TD would acquire the rest.

BMO Capital Markets has estimated that the Aerogold card, which is CIBC's most popular credit card, accounts for half of the bank's credit card business and about seven or eight per cent of its total earnings.

The likely defection of existing Aerogold cardholders  — from CIBC to TD and other banks with loyalty programs — was expected to impact CIBC revenues, analysts said at the time the deal was announced.

For Aimia, the Aerogold contract represents about 25 per cent of gross billings, which is the amount the company gets for its miles before deductions.