CEO-in-waiting Gerald McCaughey pulled off another high-level management overhaul at Canadian Imperial Bank of Commerce yesterday, dismissing several senior officers as part of a continuing makeover of its retail banking division.
The moves come less than two months after CIBC parted ways with vice-chairwoman Jill Denham and promoted Sonia Baxendale to assume her role as head of the bank's flagship retail unit.
Ms. Baxendale, a 13-year veteran of CIBC who previously ran the bank's wealth management operations, wasted little time surrounding herself with a new management team, essentially removing a partial layer of executives that had reported directly to Ms. Denham.
The departures in the retail division yesterday include Gerrard Schmid, executive vice-president and chief operating officer; Stephen Graham, executive vice-president and chief marketing officer; Kenn Lalonde, executive vice-president of branch and small-business banking; and Richard Graham, senior vice-president of strategic development at Amicus, the electronic banking division.
Steve McNair, executive vice-president of private wealth management and Imperial Service -- a group of 1,200 investment advisers that work out of CIBC branches -- retired.
Ted Cadsby has been appointed executive vice-president of retail distribution, and CIBC is still searching for someone to oversee marketing, but in a more junior capacity. The other positions, however, will not be filled.
"The management structure has been simplified," said Rob McLeod, a spokesman for the bank. "This is bringing the customer closer to the senior management team."
Mr. McLeod said the moves were part of a larger restructuring CIBC announced in April, in which it transferred parts of its wealth management businesses, including Imperial Service and guaranteed investment certificates, into the retail group. The bank also told investors and analysts last week that it will try to cut $250-million in costs by the end of 2006 to align its expenses more closely with its peers.
The architect of the retail banking overhaul is Mr. McCaughey, who was elevated to president last year and anointed as the heir apparent to CEO John Hunkin, who many industry watchers expect will retire by the end of 2005.
Mr. McCaughey, a broker by training, has been attempting to wean the bank off its reliance on the unpredictable and accident-prone investment banking unit, CIBC World Markets Inc., in favour of the more consistent returns of retail banking and wealth management.
The bank's culture has not been immune to this transformation. Several close colleagues of Mr. Hunkin, who ran CIBC World Markets before he took the top job in 1999, have left the bank recently. David Kassie, once touted as Mr. Hunkin's eventual replacement, was ousted last year as head of the investment bank, which has recently struck well-publicized settlements with U.S. regulators over Enron Corp. and the mutual fund trading scandal.
Several senior bankers followed Mr. Kassie to his new brokerage, Genuity Capital Markets, last year, leaving behind a trail of acrimony and sparking a legal battle with CIBC.
Ms. Denham, meanwhile, was also part of Mr. Hunkin's inner circle, and was handpicked by him to lead the retail division.
CIBC's retail division made $263-million in the second quarter of this year, a 32-per-cent improvement driven by lower provisions for bad loans and better volumes in personal banking. While CIBC has shifted a greater percentage of its capital resources to the retail bank, industry watchers believe the bank still has work to do on the unit.
James Keating, an analyst with RBC Dominion Securities Inc., said in a research note last week that retail profit margins were "surprisingly weak" this quarter, and noted that CIBC lost market share in several retail categories. Perhaps more worrisome, two of the bank's traditional strong suits -- mortgages and credit cards -- turned in a weak quarter, he added.
National Bank Financial Inc. analyst Rob Wessel added that despite CIBC's attempts to bring more consistency to its performance, the retail bank "continues to struggle" with volatile profitability.
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