CIBC strikes $4.9-billion deal to buy Chicago-based PrivateBancorp
Canadian Imperial Bank of Commerce is expanding into the United States with a $4.9-billion deal to buy a U.S. commercial bank, redefining CIBC's status as a Canadian regional lender and giving it far greater exposure to the U.S. economy.
The deal for Chicago-based PrivateBancorp Inc., which has 34 offices in 12 states, gives CIBC a footprint in the United States and enhances its ability to serve Canadian customers who do business there – and about 80 per cent of the bank's corporate customers do.
"We have clients that are banked by competitors in the U.S., and we risk losing them over time if we are not able to provide them with an integrated banking platform across the border, " said Victor Dodig, CIBC's chief executive officer.
After the acquisition for PrivateBancorp is finalized in 2017, CIBC estimates that its share of profits from the U.S. will double to 10 per cent and rise to about 25 per cent within five to seven years.
This marks a massive shift for the bank, which has been seen as the most exposed among the Big Five to the Canadian economy at a time of slow economic growth, high personal debt loads, an overheating housing market and an unstable environment for commodities. FULL STORY
The rationale for CIBC's U.S. acquisition
At first blush, no one should be all that surprised. Victor Dodig, chief executive officer of Canadian Imperial Bank of Commerce, has long stressed that a cross-border deal was in the cards.
Yet CIBC's purchase of Chicago-based PrivateBancorp Inc. is not precisely what investors and analysts expected. Although Mr. Dodig has talked about making an American purchase, his focus was always wealth management. What he bought, for $4.9-billion to boot, is largely a commercial lender. Non-interest income made up only 20 per cent of the target's revenues last quarter.
Asked about that dissonance, Mr. Dodig took pains on Wednesday to stress that this deal is in line with his strategy.
Asked why he was branching away from wealth management, Mr. Dodig turned defensive. "We've always said that whatever we want to invest in will be in the business and wealth-management space," he argued. "This is consistent with what we've communicated." FULL STORY
It's Victor Dodig's bank now
Eventually every chief executive puts their stamp the company they run. Sometimes it takes years. At Canadian Imperial Bank of Commerce, it's happening at light speed.
Last June, less than a year into his tenure, CEO Victor Dodig unveiled his strategic vision. It entailed being a small and sturdy regional bank that would partner with tech partners when necessary – even Apple, the tech giant out to eat every lenders' lunch.
Next came a revamp of the Canadian banking division, CIBC's bread and butter. Fast forward eight months, we've got the blockbuster acquisition of PrivateBancorp Inc. for $4.9-billion, a major way to cap the pivot off. It's certainly Mr. Dodig's bank now.
Regulators target trailer fees in proposed mutual fund revamp
Securities regulators are proposing a sweeping change in the way mutual funds are sold in Canada, saying they will launch a public consultation on a proposal to ban trailer fees and other embedded commissions in mutual fund sales.
The Canadian Securities Administrators, an umbrella group for all provincial securities commissions, issued a statement Wednesday announcing an intention to launch a focused consultation this fall to consider moving Canada toward a model that would ban embedded fees in favour of requiring investors to pay fees directly for advice.
Britain and Australia have already banned the use of trailer fees, which are fees paid to advisers annually as long as their clients hold a mutual fund. Many customers do not know their advisers receive the fees from some mutual fund companies, which can serve as an inducement to recommend certain funds over others.
Ontario Securities Commission vice-chair Grant Vingoe said regulators are not announcing they have made a final decision to ban trailer fees, but are signalling their focus is now on that option. He added the OSC does not anticipate backing a different decision. FULL STORY
DAILY DEALS
The proposed takeover of Manitoba Telecom Services by one of its rivals has taken another step forward. The $3.9-billion friendly offer from BCE Inc. has received approval from the Manitoba Court of Queen's Bench. The transaction remains subject to approvals from the federal minister for innovation and economic development, the CRTC and the Competition Bureau. FULL STORY
ON THE MOVE
Evidently there's something about Desjardins Securities that tickles the fancy of the sales and trading staff at Dundee Capital Markets. Myles Wesetvik is the latest in a long line of ex-Dundee staffers to jump to the brokerage arm of Desjardins Group. Mr. Wesetvik, who previously worked out of Dundee's Montreal office, is joining Desjardins as co-head of institutional equity trading on July 11. FULL STORY
IN CASE YOU MISSED IT
To fill its top finance job, TMX Group Ltd. is promoting from within. The exchange operator said Monday in a news release that John McKenzie, who has been with TMX Group for 16 years and is an accountant by trade, has been named chief financial officer, effective July 11. FULL STORY
Full stories are reserved exclusively for Globe Unlimited subscribers. Click here to sign up