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Walmart Inc. has reached an agreement to sell its Canadian banking operations to financier Stephen Smith and private equity firm Centerbridge Partners LP.

Walmart Canada Bank, which launched its first credit card in Canada in 2010, had been up for sale since last year. Walmart revealed the sale in financial disclosures on Thursday, but did not disclose the buyers or terms of the agreement.

Though the bank was profitable, Walmart chose to retreat from banking in Canada and Chile and focus resources on its core retail and e-commerce to compete with rivals such as Amazon.com Inc. That marks a departure from other major Canadian retailers such as Loblaw Cos. Ltd. and Canadian Tire Corp. Ltd., that continue to operate their own federally regulated banks offering credit cards with built-in customer rewards.

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Mr. Smith confirmed in an interview that he agreed to buy the bank in partnership with New York-based Centerbridge. Mr. Smith is chairman and chief executive of mortgage lender First National Financial Corp., and also the largest shareholder in alternative lender Equitable Bank. But he is acquiring Walmart Bank Canada through his private holding company, First National Securities Corp.

Centerbridge Partners specializes in private equity as well as credit and real estate, and has a history of investing in financial services businesses including banks and insurers. It was founded in 2005 by Jeffrey Aronson and Mark Gallogly.

Walmart Canada Bank, which until now has been treated as a foreign bank subsidiary in Canada, is primarily a credit-card business, issuing the Walmart Rewards MasterCard, a no-fee card that allows customers to accumulate rewards “dollars” that can be used for purchases at Walmart. Mr. Smith and Centerbridge “don’t have any immediate plans to change the business,” Mr. Smith said, but they believe there is potential to improve it.

The buyers have entered a long-term commercial agreement with Walmart to continue providing Walmart-branded rewards cards and other products to the retailer’s Canadian customers, who “won’t really perceive a difference,” Mr. Smith said. But the bank itself will be rebranded under a new name.

“I think Walmart has a great customer base, they have a lot of credit-card customers,” he said. “We felt it still had opportunity based on the penetration of Walmart within the Canadian retail sector, that it had room for further growth, and we saw growth possibilities. So we thought that was a good asset.”

Walmart Canada Bank reported slightly more than $40-million in profit for 2017 in filings with Canada’s banking regulator, the Office of the Superintendent of Financial Institutions. As of March 31, the bank had total assets of nearly $1.2-billion.

The purchase price has not been disclosed, and the deal is still subject to regulatory approvals, but Mr. Smith expects the deal could close within six months.

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Walmart also reported an $81-million charge on the pending sale of its Canadian bank, part of which relates to accounting changes required under the new IFRS 9 standard.

Representatives from Walmart and Centerbridge were not available to comment.

The new owners have no plans to cut jobs, Mr. Smith said, and may add staff to fill functions that were performed by Walmart Canada or to fuel the bank’s growth.

“It’s a fairly efficient organization. Walmart’s a good operator and we like the Walmart ethos of everyday low prices as giving a good value for the consumer, and we intend to run the business the same way,” he said.

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