(Bloomberg) -- Canadian Imperial Bank of Commerce is taking over Capital One Financial Corp.'s Costco Wholesale Corp. credit card business in Canada, helping diversify its portfolio away from travel rewards.
CIBC will buy Capital One's existing portfolio of Costco-branded Mastercards, which has more than C$3 billion ($2.4 billion) in outstanding balances, and become the exclusive issuer, according to a statement Thursday. The change is expected to begin in early 2022, Toronto-based CIBC said. Terms weren't disclosed.
CIBC Chief Executive Officer Victor Dodig said on an earnings call last week that the lender planned to invest in non-travel cards to capture more consumer spending as the pandemic wanes. The move also is meant to draw customers to the firm's Canadian retail-banking franchise, which has been on the rebound as its mortgage business improves.
“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,” Laura Dottori-Attanasio, head of personal and business banking, said in the statement.
The lender's Canadian personal and business banking unit had average credit card balances of C$10.6 billion in the three months through July. That was up 0.6% from the previous quarter but down 5.5% from a year earlier.
CIBC rose 0.4% to C$145.71 at 9:43 a.m. in Toronto. The shares are up 34% this year, compared with a 22% gain for the S&P/TSX Commercial Banks Index.
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