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By Christine Dobby and Derek Decloet<\/strong><\/em><\/p>\n (Bloomberg)<\/em> \u2014 Canadian lender EQB Inc. is buying the banking division of the country\u2019s largest supermarket chain to boost its deposit and credit card businesses.\u00a0<\/p>\n EQB is acquiring President\u2019s Choice Bank, along with some related insurance businesses, from Loblaw Cos. for about $800 million, with most of it to be paid in shares, according to a statement Wednesday.\u00a0<\/p>\n The deal will give Loblaw, a retailer controlled by Canada\u2019s billionaire Weston family, a stake of at least 17% in EQB.<\/p>\n EQB Chief Executive Officer Chadwick Westlake said the transaction is meant to create a \u201cscaled challenger\u201d to Canada\u2019s Big Six banks. PC Financial has more than 2 million Mastercard accounts, giving his firm an entrance into the credit-card space, and PC Optimum is a dominant retail loyalty program with more than 17 million members. \u00a0 \u00a0\u00a0<\/p>\n \u201cThis nearly doubles our revenue,\u201d Westlake said in an interview. \u201cIt increases our non-interest revenue by four times, increases our reach.\u201d\u00a0<\/p>\n The deal will combine the two firms\u2019 digital platforms, he said, but it will also bring EQB to physical stores for the first time \u2014 there are PC Financial kiosks in more than 180 Loblaw locations.\u00a0<\/p>\n For its part, Loblaw saw the opportunity to \u201cpartner with someone with scale and expertise,\u201d said Richard Dufresne, chief financial officer of the retailer.\u00a0<\/p>\n Loblaw wasn\u2019t looking to work with a bank, he said, noting that he\u2019s seen other examples of such tie-ups where the \u201cbalance of power is never on the side of the retailer,\u201d and the company wanted to be careful with its PC Financial clients, who are among its best customers. The two firms began discussions last year and took months to work out the details.\u00a0<\/p>\n \u201cWe wanted to be in a situation where we really feel that it\u2019s a great partnership,\u201d Dufresne said. \u201cWe didn\u2019t know the EQB brand, to be very candid, but we saw the track record, we saw the strength of management and we saw the strategy.\u201d\u00a0<\/p>\n EQB has had a tumultuous year. In June, longtime Chief Executive Officer Andrew Moor died suddenly at the age of 65. The bank brought back Westlake, its former chief financial officer, to run the company. In October, the firm cut 8% of its staff, and on Wednesday, it reported adjusted earnings of $1.53 per share, about 23% less than the average analyst estimate in a Bloomberg survey.<\/p>\n The deal with Loblaw, which is subject to regulatory approvals and expected to close next year, will add $5.8 billion in assets and more than $800 million in deposits, EQB said. PC Financial has about 300 employees that will join EQB, Westlake said.\u00a0<\/p>\n
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