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The Canadian Imperial Bank of Commerce head office in Toronto, Canada. (Photo: Glassdoor)

CIBC cuts jobs, shuffles C-suite in cost-control mission

The Canadian Imperial Bank of Commerce head office in Toronto, Canada. (Photo: Glassdoor)

Canadian Imperial Bank of Commerce (CIBC) shuffled its top management ranks, cut jobs and took a restructuring charge as Chief Executive Officer Victor Dodig works to control costs.

Canada’s fifth-largest lender by assets recorded a CN$339-million (US$255 million) charge in its fiscal first quarter to cover severance from staff reductions, as the pace of expense growth accelerated for a sixth-straight quarter. CIBC also named new managers including the head of its largest division, Canadian personal and business banking, where the main product line — mortgages — lagged behind rivals in the past year.

CIBC President And CEO Victor Dodig (Photo: BNN Bloomberg Canada)

The moves are part of Dodig’s efforts to reshape the Toronto-based bank while improving efficiencies. CIBC follows Bank of Montreal and Toronto-Dominion Bank in taking restructuring charges in recent quarters, as tighter margins, rising provisions, and a more challenging operating environment damp revenue growth and spur Canadian lenders to cut costs to increase earnings.

The job cuts will affect almost five per cent of CIBC’s employees, Chief Financial Officer Hratch Panossian said on a conference call Wednesday. Based on the bank’s 45,083 full-time positions in the first quarter, the reductions equate to about 2,200 employees, the biggest cut in two decades.

“We’re not taking these decisions lightly, but the restructuring will help us repurpose our cost structure as we simplify, reinvest in and position our bank to further strengthen our relationships with our clients.”

— Victor Dodig, president and CEO, Canadian Imperial Bank of Commerce

The reductions come as non-interest expenses soared 11 per cent to CN$3.07 billion — the highest in more than 14 years — with the bank citing higher performance-based compensation, the restructuring and “continued investments to fuel future growth” for the jump.

The restructuring charge, which totalled CN$250 million after taxes, “supports an enterprise-wide programme to accelerate delivery of our priorities, including improving our efficiency”, Dodig said on the call. “We’re not taking these decisions lightly, but the restructuring will help us repurpose our cost structure as we simplify, reinvest in and position our bank to further strengthen our relationships with our clients.”

Expense Push

Dodig’s expense push is showing some progress, with the bank’s adjusted efficiency ratio — a measure of what it costs to produce a dollar of revenue — improving to 55 per cent in the three months through January 31 from 56 per cent in the fourth quarter. In December, Dodig changed his efficiency target to what he said was a more “realistic” range of 53.5 per cent to 54 per cent for 2022, from an earlier goal of 52 per cent.

The bank’s shares were little changed at CN$106.13 at 9:36 am today in Toronto. They’ve dropped 1.6 per cent this year, compared with a 0.7 increase increase in the S&P/TSX Commercial Banks Index.

The Toronto Stock Exchange stands on Bay Street in Toronto, Ontario, Canada, on Monday, August 29, 2011. Bay Street is the centre of Toronto’s Financial District and is often used as a metaphor to refer to Canada’s financial industry.
(Photo: Brent Lewin/Bloomberg via Getty Images)

CIBC also reworked its management ranks, with Chief Risk Officer Laura Dottori-Attanasio becoming senior executive vice president of Canadian personal and business banking, the company’s largest division. She replaces Christina Kramer, who was named senior executive vice president of technology, infrastructure and innovation.

Shawn Beber was appointed chief risk officer, and Harry Culham, CIBC’s capital markets head, was given added responsibilities for the Caribbean, the bank’s CIBC Mellon custodial banking partnership and direct-to-consumer businesses including Simplii Financial. The moves are effective March 2, CIBC said.

Chief Risk Officer Laura Dottori-Attanasio has been promoted to senior executive vice-president of Canadian personal and business banking. (Photo: YouTube)

CIBC’s quarterly results beat analysts’ estimates, with a 2.5 per cent increase in net income led by surging capital-markets earnings and gains from the company’s Canadian banking and wealth management divisions. The bank also raised its dividend.

“Overall we have a positive view” on results, RBC Capital Markets analyst Darko Mihelic wrote in a note to clients. “Better results versus our forecast were largely capital markets driven and all other major segments were relatively in line with our forecast.”

— Bloomberg