CIBC Acquires Costco’s $3B Mastercard portfolio

Sep 2, 2021 By MarketDepth

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Canadian Imperial Bank of Commerce (NYSE: CM), has signed a long-term deal to become the exclusive issuer of Costco Mastercards in Canada, starting early 2022. Furthermore, CIBC will be acquiring the current Canadian Costco credit card portfolio, which has more than USD3 Billion in outstanding balances. Mastercard will continue to be the exclusive payment network for the Costco credit card in Canada.

“We are excited to partner with Costco, one of the best and most recognizable brands in Canada for providing unparalleled value, to enhance the rewards program and deliver even more value to their members,” said Laura Dottori-Attanasio, Group Head, Personal and Business Banking, CIBC. “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.”

The acquisition undoubtedly grows and diversifies CIBI’s credit card portfolio within the rewards and travel categories. The move also allows the bank to cultivate relationships with new clients from Costco’s large member base.

Terms regarding the acquisition of the existing card portfolio have yet to be disclosed by CIBC.

“Canadian P&C banking is certainly a game of inches given how mature the market is, and so the ability to pick up $3 billion in high quality credit card balances all in one swoop does not happen every day,” said Scotiabank analyst Meny Grauman in a note to clients.

“That said, it is clear that the real prize here for CIBC will be the cross-selling opportunities to millions of affluent card holders, only a small portion of which are current CIBC customers.”