Canadian Tire shopping its Financial Services unit, Canadian Tire Bank | Canadian Tire | Discussion forum

Doug said

According to this Financial Post via the Ottawa Citizen article, Canadian Tire Corporation is seeking what it's calling a "financial partner" to buyout its Financial Services division, namely its credit card portfolio which is nearly $5 billion and one of the largest MasterCard issuers in Canada (after, I believe #1 ranked BMO, #2 ranked CIBC and #3 ranked TD Canada Trust) to "ease its funding costs" and "reduce balance sheet risk". The only way to do that, since they already securitize their credit card receivables via the Glacier Credit Card Trust, is to sell the business outright. They don't want to come right out and say that, but it's all PR spin.

I meant to predict this would happen ever since Canadian Tire announced their spinning out (most) of their company-owned real estate portfolio into a REIT earlier this year but never got around to it. The time seems right - there's less focus on consumer debt and funding costs are higher even though interest rates are at record lows (a strange anomaly).

It'll be highly sought after, but with RBC expected to lose the Shoppers Optimum MasterCard account once Loblaw Companies fully absorbs Shoppers Drug Mart and awards it, as I expect, to CIBC by instead offering PC Financial/Shoppers Optimum MasterCards at Shoppers Drug Mart stores (in what would be full circle - they started with CIBC as their partner, switched to MBNA, which became TD Canada Trust and then switched to RBC). Since CTFS high-interest savings accounts and GICs are part of that funding, I expect whoever acquires the CTFS loan/LOC/credit card portfolio will be asked "take on" the deposits as well. Since I expect that successful bidder to be an established Canadian bank, likely either RBC but possibly TD Canada Trust or National Bank, I fully expect they'll wind all operations into themselves, in much the same way RBC did with Ally's Canadian business earlier this year.

Prepare to scratch another HISA account competitor off your list. A caveat: they may still offer a specially-branded "Canadian Tire HISA" and "Canadian Tire GIC" - or, more likely, promote the bank's own deposit products via a co-branded Canadian Tire/new bank financial services website - but I fully expect them to be offered by the parent institution going forward.

Cheers,
Doug

I worked for Sears Canada for 40 years and had acquired stock options that I bought into. I got to the point,of selling them off as they were too up and down and not going the way I wanted! So I sold them off and only made a few dollars. Here is the stupid hind sight thing! I was aware, over the years, that Sears credit could be up for sale but never thought the profit from selling credit off would benefit me and that they would use the funds to buy down the companies debt, but boy I was wrong!! I lost out on 20,000 as they paid a huge dividend to the shareholders vs paying down the debt.

Moral of the story .... Share holders of CT just may benefit!