The Canadian Imperial Bank of Commerce has confirmed plans to "substantially reduce or close" its loss-making US electronic banking business. CIBC says it will also consolidate operations in domestic retail banking and downsize systems support at CIBC World Markets and associated wealth management businesses.
The overhaul of CIBC's Amicus electronic banking initiative in the US markets has been long-trailed. The bank says the restructuring of the business will result in a charge of up to C$240 million (after tax), or C$375 million (before tax), in the fourth quarter of 2002.
CIBC says operating losses from these activities will be substantially lower in the first quarter of 2003 and are expected to be negligible after that. Further details will be available when the bank releases its fourth quarter financial results at the end of November.
CIBC's domestic electronic banking business, delivered through President's Choice Financial, is expected to break into profit by Q4 2003, and will be unaffected by events further south.
The bank also announced plans to cut staff levels at CIBC World Markets by approximately 240, primarily in the United States. The bank says the cuts follow from a "continued low level of business activity, particularly in investment banking".
In addition, operations and systems development support for CIBC World Markets and associated wealth management businesses will be "re-engineered" says the bank, resulting in the loss of 470 jobs. This will result in a pre-tax charge of approximately C$80 million in the fourth quarter.
CIBC's retail banking business will also incur a charge of C$70 million as the bank implements network efficiency measures necessitating the consolidation of operation support.
The Canadian bank is expected to incur further losses on its loan portfolio and within its merchant banking business when it reports in the fourth quarter.
In a statement, the bank says: "CIBC is taking an aggressive approach to managing controllable expenses, without reducing the commitment CIBC has made to continuous development of its information and customer service technology platform."