Citigroup has said that it will sell its nearly $2-billion Canadian MasterCard business to credit card issuer Canadian Imperial Bank of Commerce (CIBC) as part of its efforts to divest non-core assets.
The sale of the unit is consistent with Citi's strategy to reduce its assets and operations within Citi Holdings so it can focus on its core business of commercial banking.
In a statement, Citi said that it has "signed a definitive agreement to sell its Canadian MasterCard business to the Canadian Imperial Bank of Commerce".
The transaction is expected to close by October 31, subject to regulatory approvals.
Through the transaction, CIBC -- with more than $14 billion in outstanding credit-card balance as of April 30 -- will become the largest dual credit-card issuer in Canada, the company said in a separate statement.
CIBC President and Chief Executive Gerry McCaughey said the deal would strengthen the company's client base and diversify its credit card portfolio.
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However, neither Citi nor CIBC disclosed the terms of the sale.
The American firm said that though the sale would reduce Citi's assets in Citi Holdings by about 2 billion Canadian dollars ($1.93 billion), it would not have any material impact on its net income.
"This transaction demonstrates the continued progress we are making in our efforts to divest non-core assets. Our team continues to pursue opportunities to reduce assets in Citi Holdings in a way that will create value for our stakeholders," said Citi CEO Vikram Pandit.
Citigroup, in which the US government holds a 27 per cent stake following a bailout in 2008, is understood to be shedding almost a third of its holdings -- of about $1.86 trillion -- under regulatory pressure to shrink.
Last year, Citi had earmarked non-core assets worth $715 billion for sale.