The deal, expected to close by 31 October subject to regulatory approvals, will make CIBC the largest dual credit card issuer in Canada. As of April it already had more than $14 billion in outstanding credit card balances.

Citi says the deal is not expected to have a material impact on net income or capital ratios. CIBC says it should be accretive to earnings during the first year.

Citi has already sold its Diners Club North America card business to Bank of Montreal (BMO) and its Italian and Portuguese credit card businesses to Barclays in the last year as it seeks to streamline operations following the economic meltdown.

Vikram Pandit, CEO, Citi, says: "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."

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