Canadian Imperial Bank of Commerce (CIBC) has agreed to buy the Canadian Costco credit card portfolio for an undisclosed sum.
The card portfolio has more than $3bn in outstanding balances.
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Moreover, the bank entered into a long-term agreement to serve as the exclusive issuer of Costco Mastercards in Canada.
US lender Capital One, the existing issuer of the Costco-branded credit card, is ending its alliance with the retailer.
Mastercard will continue to be the exclusive payment network for the Costco cobranded credit card in Canada and acceptance in Canada’s Costco warehouses.
Costco Canada SVP country manager Pierre Riel said: “Our members and CIBC clients expect us to deliver payment options that meet their needs.
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By GlobalData“Through enhanced offerings such as leading digital capabilities, robust features and stronger rewards, our members will have even more ways to get the most out of their membership.”
This acquisition is pending customary closing conditions, with completion expected in early calendar year 2022.
Thereafter, the bank will start issuing the new CIBC Costco Mastercard to the converted portfolio and take new applications.
The new CIBC Costco Mastercard will offer rewards for shopping at all Canadian Costco warehouses and online.
It will be the Costco membership card and will also be used at merchants worldwide accepting Mastercard.
CIBC group head, Personal and Business Banking Laura Dottori-Attanasio said: “This relationship enables us to diversify our credit card portfolio in everyday rewards, grow our market share in payments, and provides a meaningful opportunity to deepen relationships by meeting the financial needs of Costco members.”
CIBC offers a range of services covering personal and business banking, commercial banking and wealth management, and capital markets businesses.
The bank serves 10 million personal banking, business, public sector and institutional clients.
CIBC in the news
Earlier this year, regulators halted the sale of a $797m stake in the bank’s Caribbean unit.
CIBC planned to sell two-thirds of stake in CIBC FirstCaribbean to GNB Financial Group.
Last December, CIBC launched a conversational AI-based Virtual Assistant powered by IBM Watson Assistant.
