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RBC Expects to Win Over New Cardholders If CIBC Loses Aeroplan to TD

According to Bloomberg, Royal Bank of Canada (RY) expects to gain more credit-card customers if Canadian Imperial Bank of Commerce loses its card partnership with loyalty rewards operator Aimia Inc. (AIM) toToronto-Dominion (TD) Bank. We’ve been saying this for a while at GreedyRates.ca, if the Aeroplan program changes hands, Canadian consumers will have a field day picking through offers from RBC, TD, CIBC, BMO, Scotia and CapitalOne, all looking to compete for their business to find the best credit card as CIBC’s 1 million Aerogold customers are forced to make a switch.

Canadian Imperial has until tomorrow to match the terms of an agreement Toronto-Dominion made to become the primary card issuer for Aimia’s Aeroplan rewards program if it wants to keep its 22-year partnership. Toronto-Dominion conditionally agreed on June 27 to become Aimia’s partner starting Jan. 1.

“This market turmoil creates opportunities, it wakes people up,” Linda Mantia, executive vice president of cards and payment solutions at Toronto-based Royal Bank, said today in an interview with Bloomberg. “There’s a great opportunity for us to continue the growth momentum that we have” with our reward cards.

With 1 million of Canada’s most attractive credit card customers up for grabs, we can expect an increase in direct marketing efforts and richer offers such as welcome bonus points, annual fee waivers, introductory rates, etc… Aerogold cardholders themselves should make out the best, with targeted offers from Aimia, TD and CIBC to retain their business.

Royal Bank introduced the RBC Avion travel card program in 1999 and has since attracted more than a million customers. The lender said it expects any change in Aimia’s partnership will prompt cardholders to weigh alternatives.

Canadian Imperial will probably opt out of its agreement with Aimia, leading Toronto-Dominion to take over the partnership, said John Aiken, a Barclays Plc analyst in Toronto.

“Given CIBC’s public statements, we do not believe it will exercise its right, and could potentially seek damages through the courts,” Aiken said yesterday in a note to clients. “With a deal unlikely, expect earnings and valuation to come down heading into Q3.”

If, in fact, CIBC does employ a litigious strategy, and gets an injunction to prevent TD and Aimia for partnering July 1st, this may get a lot nastier and more confusing for all parties.

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