CIBC (TSX:CM) has acquired a $2.1-billion credit card portfolio from Citigroup’s Canadian MasterCard business, the bank said Monday.

Through this transaction, CIBC, which had more than $14 billion in outstanding credit card balances at April 30, will become the largest dual credit card issuer in Canada.

“This acquisition is directly aligned with our strategy to grow our core Canadian operations,” says Gerry McCaughey, president and CEO. “It will further strengthen our highly successful credit card business by broadening our client base and diversifying our credit card portfolio.”

“This is the right risk-aligned way to grow our credit card business in Canada and further strengthen our leading position,” adds McCaughey.

The transaction is expected to be add to CIBC’s earnings during the first year following its closing.

In addition, prior to closing, non-performing accounts will be removed from the acquired portfolio and from Broadway Credit Card Trust, which has securitized certain Citibank MasterCard receivables.

The MasterCard portfolio that CIBC will acquire includes accounts associated with co-branded Petro Canada credit cards that offer the “Petro Points” rewards program.

This is the third transaction CIBC has undertaken since early March including the acquisition of the remaining 50% of CIT Business Credit Canada and the purchase of a minority stake in Bermuda-based The Bank of N.T. Butterfield & Son Limited.

Completion of the credit card portfolio acquisition is subject to certain conditions, including obtaining regulatory approval and approval from the note holders of Broadway Credit Card Trust. These conditions are expected to be satisfied before the end of CIBC’s fourth fiscal quarter on Oct. 31.

Under the terms of the transaction, CIBC will acquire all of the outstanding Class B notes, Class C notes and Series Enhancement Notes issued by the Broadway Credit Card Trust and will assume the servicing and associated responsibilities in respect of the trust.

IE