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New York - Bank of America Corp plans to sell its credit card business in Canada to TD Bank Group and will exit the rest of its international card business, the bank said on Monday.
TD Bank's agreement with Bank of America, the largest US bank by assets, covers an $8.6bn card portfolio, according to a Bank of America statement. It did not disclose the value of the transaction.
TD Group said it will pick up 1.8 million active card accounts from the deal and that it would pay a "modest premium" for the card receivables.
Bank of America also said it would exit its United Kingdom and Ireland card businesses. It has not made a decision on the future of those businesses, which it may wind down or sell, a spokesperson said.
The move effectively ends Bank of America's consumer banking operations overseas, and comes as it seeks ways to bulk up its capital cushion.
The bank is fighting lawsuits and credit problems related to its ill-fated acquisition of home mortgage lender Countrywide Financial Corp three years ago as the US housing bubble burst.
The bank has lost more than $22bn in its consumer mortgage division in the last four quarters. It agreed in June to pay $8.5bn to mortgage securities investors and is fighting numerous lawsuits challenging the settlement and other mortgage issues.
The sale was not a reaction to analyst estimates over the last week that the bank would need to raise capital to absorb those losses, said Bank of America spokesperson Jerry Dubrowski. The reports sent its shares down by 20% last Monday.
Bank of America said the deal would have a positive effect on its capital levels. It is expected to close in the fourth quarter.
Since Brian Moynihan replaced Kenneth Lewis as chief executive in January 2010, Bank of America has been shedding what it considers "noncore assets."
Last week, Moynihan said in a conference call with investors that the bank has sold 23 businesses and assets over the last six quarters.
The sales ranged from a large portion of the bank's stake in BlackRock Inc, the world's largest asset manager, to Balboa Insurance, which provides foreclosure insurance.
The bank has earned $30bn in proceeds through those asset sales, Dubrowski said.
Bank of America said it agreed on August 3 to sell its card business in Spain to Apollo Capital Management. In April, it sold a small business lending portfolio in the UK to Barclays.
The bank's shares were up 3% at $7.40 in early trading on Monday.
