US retail major Target has agreed to sell its $5.9bn consumer credit card portfolio to TD Bank Group for an amount equal to the gross value of the outstanding receivables at par value.

The companies also entered into a seven-year program agreement wherein TD will underwrite, fund and own forthcoming Target Credit Card and Target Visa receivables in the country.

TD will take over the risk management policies and regulatory compliance while the retailer will continue to perform account servicing functions.

Commenting on the developments Target chairman, president and chief executive officer Gregg Steinhafel remarked that the sale helps the retailer achieve its strategic and financial goals through a portfolio sale.

"We look forward to working with this premier global financial institution to continue Target’s long history of innovation in our guest-focused financial services strategy," said Steinhafel.

TD Bank Group president and CEO Ed Clark added, "Our agreement with Target will significantly expand our presence in the North American credit card business and will establish TD as a key player in this space."

Under the terms of the agreement Target will continue to earn a substantial portion of the profits generated by the Target Credit Card and Target Visa portfolios.

Beginning with the fiscal quarter in which the transaction closes, Target will no longer report its US credit card segment under its earnings.

Subject to regulatory approval, the transaction is expected to close by the middle of 2013.