TORONTO Canadian Imperial Bank of Commerce (CM.TO), Canada's No. 5 bank, said on Monday it agreed to buy Citigroup's (C.N) C$2.1 billion ($2 billion) Canadian MasterCard business, becoming a dual credit card issuer.
"Through this transaction, CIBC, which had more than C$14 billion in outstanding credit card balances at April 30, 2010, will become the largest dual credit card issuer in Canada," the Toronto-based bank said in a statement.
CIBC, which previously issued only Visa credit cards, said it expects the transaction to add to its earnings during the first year following its closing.
Financial details of the deal with Citigroup were not disclosed.
The bank posted lower than expected quarterly profit in the second quarter and said it would focus on beefing up domestic business banking.
"The MasterCard portfolio that CIBC will acquire includes accounts associated with co-branded Petro-Canada credit cards that offer the "Petro Points" rewards program," CIBC said of the acquisition, which is the third for the bank since March.
In April, CIBC said it purchased CIT Financial Ltd's interest in CIT Business Credit Canada Inc for an undisclosed amount.
And in March the bank said it acquired a 22.5 percent stake in Bermuda's Bank of N.T. Butterfield & Son Ltd. in a deal that expands its footprint in the Caribbean.
Under the terms of that deal, CIBC invested $150 million as part of a $550 million recapitalization of Butterfield, Bermuda's largest bank.
"We have had these transactions on our target list for an extended period of time," said CIBC Chief Executive Gerry McCaughey.
Shares of CIBC closed up 1.24 percent at C$72.69 on Monday on the Toronto Stock Exchange.
(Reporting by Pav Jordan; editing by Rob Wilson)