TD Card Buys Bank of America Corp.s Credit Card: Tops $20 billion Canadian buying spree
Toronto Dominion Bank agreed to buy Bank of America's MasterCard portfolio in Canada. This recent purchase of an asset from U.S. firms followed a series of purchases done by other Canadian lenders that got great buys from American institutions. Toronto-Dominion Bank arranged to pay C$7.5 billion in exchange for the US banks credit card business in the country.
TD's Buying Power
TD Bank's purchase came about five months after buying Chrysler Financial Corp. at the price of $ 6.3 billion. It also followed purchases of U.S. property sealed by Bank of Montreal and Canadian Imperial Bank of Commerce within the last 12 months. This buying spree has something to do with the recent financial crisis that U.S. lending institutions are going through. As such, Canadian banks have grabbed the opportunity to accumulate assets from foreign lenders in financial hot water.
Banks in Canada holds the honor of being ranked number one by the World Economic Forum in terms of stability. In fact, these Canadian financial institutions have held the title for three straight years. Given the stability and the resilient flexible earnings, these banks are really quite capable of acquiring assets from financially-troubled institutions, specifically from the United States of America.
As reported by Bloomberg, Canadian banks took part in $16 billion worth of acquisitions in the previous year. These acquisitions included the purchase of the Illinois institution, Bank of Montreal. For this year, 2011, Bloomberg data showed that Canadian banks have spent around $12.6 billion on purchases of assets from foreign lenders experiencing financial difficulty.
Good News for Canadians
Canadian banks are expected to post an average of 13% in growth during the third-quarter fiscal results reporting within this month, according to an analyst from the CIBC World Markets. Further, the number of jobless people in Canada dropped to its lowest since 2008. On the other hand, home prices increased in July. This is a bit of good news for Canadians as values of U.S. homes have taken nose-dives to the lowest rates in around 10 years.TD Bank's acquisition of Bank of America's Mastercard made Toronto-Dominion the main MasterCard issuer in Canada. This also means that TD Bank, the second largest bank in the country, is set to benefit from an increase in its customer base where credit cards are concerned by as much as 50 percent. However, due to an expected "heightened revenue pressure in the US", TD BANK was brought down from its "outperform" status to "neutral" by Sumit Malhotra, an analyst from Macquarie Capital Markets.
CMA RESOURCES:
Toronto Dominion Bank
Mastercard
credit cards
credit
EXTERNAL RESOURCES:
CBC's TD buys MBNA's Canadian credit card business
TD Card Deal Caps $20 Billion in Canadian Bank Purchases
TD BANK
Bank of Montreal
