Toronto-based Scotiabank has reached an agreement to acquire 20% shareholding in Canadian Tire’s banking business, in a deal valued at nearly C$500m ($459m), as part of its strategy to gain major portion of the country’s attractive credit-card market.

Canadian Tire, which provides banking, insurance and company-branded credit-cards through its financial-services division, said that the deal has been designed to grow retail and financial service businesses.

Additionally, the transaction will also deliver significant benefits to customers and facilitate closer collaboration to enhance customer affinity for both brands.

Under the terms of the agreement, Scotiabank will provide the retailer’s financial-services business with credit-card receivable financing of up to C$2.25bn.

The lender will also become the sole partner for new banking products for Canadian Tire customers, by building a joint marketing platform for the two companies.

The agreement also gives an option for Canadian Tire to divest up to 29% additional stake of its financial services business to Scotiabank within the next 10 years at the then fair market value.

Canadian Tire CEO Stephen Wetmore said, "The real strength of our partnership with Scotiabank lies in the opportunity it creates to benefit our retail customers and grow our business."

"By working together and innovating, we will better serve our customers, earn new business, and strengthen our community initiatives."

Canadian Tire’s financial services division is one of the largest credit card issuer in Canada with C$4.4bn receivables, 1.8 million active customer accounts, and C$12bn in annual spend volume.