MINNEAPOLIS (AP) — Target Corp. said Wednesday that it has completed the sale of its consumer credit card portfolio to TD Bank Group for $5.7 billion.
The companies announced in October that Target would sell the entire consumer credit card business to TD after searching for nearly two years for a buyer. They also entered into a seven-year agreement under which TD will underwrite, fund and own future Target credit card and Target Visa receivables in the U.S.
As part of the agreement, TD will control risk-management policies and regulatory compliance and the retailer will continue to perform account servicing functions. That means TD Bank will make decisions about things like which applications are accepted and what interest rates are charged to customers, while Target still handles bill processing and customer service issues.
Target estimates it will recognize a pre-tax gain of about $393 million on the sale in its first quarter, in addition to a pre-tax gain it recorded in its 2012 fiscal year. The company plans to use 90 percent of the proceeds to lower its debt and the remainder to buy back shares.
Target also said Wednesday that Terry Scully, president of financial and retail services, will retire in March of 2014. Scully will move into a strategic advisory role next month to ensure a smooth transition following the completion of the deal.
Scully, 60, has worked for Target since 1979 in a variety of financial and credit card roles. He became Vice President of Finance for Target Financial Services in 1998 and was promoted to his current role in 2003.
Target said that Scott Kennedy, 44, will succeed Scully. Kennedy joined Target in 2005 and is currently the company's vice president of pay and benefits.
Target, based in Minneapolis, has 1,787 stores in the U.S. and Canada.
Its shares rose 32 cents to close at $67.43.