RBC, Canada's largest bank, will also buy Shoppers' existing Mastercard Optimum credit card portfolio for an undisclosed sum, it said in a release.

"This is a natural extension of the strategic alliance between RBC and Shoppers Drug Mart," said Dave McKay, RBC's group head of Canadian banking.

The deal will increase RBC's credit card portfolio at a time Canadian banks are struggling with meager returns from their consumer lending businesses.

Profit at Shoppers, Canada's largest drug store chain, has come under pressure as a result of reforms launched by Canadian provinces that have brought down prices for generic drugs. The new cards will offer rewards points under Shoppers' Optimum program.

In January, the two companies teamed up to offer co-branded bank accounts and debit cards. Shoppers said at the time it would put 300 RBC bank machines in its stores.

Other Canadian banks and retailers have also partnered in the hope of expanding their markets.

Last October, Bank of Montreal and Empire Co's Sobeys supermarkets launched a co-branded debit card, while grocer Loblaw Cos has a long-standing partnership with Canadian Imperial Bank of Commerce.