The Canadian Bank of Commerce opened for business in Toronto in 1867 just weeks before the Dominion of Canada gained independence from Britain. One of the bank’s principal founders was prominent Toronto businessman The Honourable William McMaster. Displeased about Montreal’s grip on Upper Canada’s (Ontario) commerce, William McMaster hoped the new bank would make credit and banking services more accessible to the local Toronto business community. The Canadian Bank of Commerce opened its first branch outside of Ontario in 1870 in Montreal. Two years later, the bank opened a branch in New York City to better serve its customers dealing with the U.S. Between 1874 and 1895, the bank’s rapidly-expanding network grew from 24 branches to 58 branches.
The discovery of gold in west-central Yukon in 1896 led to a major gold rush to that remote part of Canada, which became known as the famous Klondike Gold Rush. The barren base camp quickly turned into the bustling Dawson City of 40,000 gold prospectors and other migrant workers in 1898. The Dominion government encouraged the Canadian Bank of Commerce to set up a branch in Dawson City. Due to its remoteness, the expedition from Toronto took two months to arrive. Ironically, the Klondike Gold Rush ended as quickly as it started, and by 1899, the population had plummeted to 8,000.
In 1901, the Bank of Commerce (as it’s commonly known) took over the Bank of British Columbia and instantly acquired a network in British Columbia, Oregon, Washington and California. Bank of British Columbia’s London headquarters then became the Canadian Bank of Commerce’s British branch. In 1903, the Canadian Bank of Commerce expanded eastward and bought the Halifax Banking Company, gaining a network of branches in Nova Scotia. Further Maritimes expansion came in 1906 when the bank acquired the Merchants Bank of Prince Edward Island.
A major expansion for the bank happened in 1912 when it took over the Eastern Townships Bank and its 100-branch network in southeastern Quebec and Western Canada. By this time, the Bank of Commerce’s branches numbered over 370. Peace was disrupted in 1914 when World War I broke out in Europe. Even though no battle was fought in North America, over 1,700 (male) Canadian Bank of Commerce employees enlisted to support the British army. The void left by the departure of many employees was filled by the hiring of over 1,400 women employees, the first time that women made up any significant number of the bank’s payroll.
Peace and boom times returned in the 1920s around many parts of the world. Seeing the rapid expansion in trade with the Caribbean, the Canadian Bank of Commerce launched operations in Cuba, Jamaica, Barbados and Trinidad. Domestically, the formation of Stelco and Dofasco in the 1910s rapidly transformed Hamilton into Canada’s “steel town.” The Bank of Commerce in 1924 took over the Bank of Hamilton and its 100 branches in southwestern Ontario and Western Canada. Then in 1928, the bank acquired Toronto-based Standard Bank of Canada, gaining another 243 branches (of which 176 were in Ontario). By 1929, the Bank of Commerce had over 700 branches across the country.
The Roaring Twenties came to an abrupt end when the stock market in New York crashed in 1929, triggering the decade-long Great Depression. Canada did not escape the economic train wreck and its unemployment soared as spending and industrial output tumbled. Interestingly, it was at this time that the Canadian Bank of Commerce decided to build a new head office building in downtown Toronto. When the 34-storey Art Deco marvel opened in 1931, it became the tallest building in the British Empire for the next 31 years.
Due to the poor economic conditions, the bank shut down many branches during the 1930s and the bank’s assets did not return to its pre-Depression level until 1940. Ironically, the soaring unemployment created demand for a new product: the personal loan. In 1936, the bank became the first Canadian bank to offer personal loans to individuals.
When World War II broke out in 1939, Canada, being part of the British Empire, immediately sent its soldiers across the Atlantic to join the front line. A significant number of the Canadian Bank of Commerce’s employees fought overseas and suffered a heavy toll. By the time peace finally returned in 1945, much of Europe and the Orient had been devastated and millions of people had been killed, injured or displaced. North America, despite also suffering heavy casualties in the war efforts, was never occupied or physically damaged. While Europe and Asia struggled to rebuild its economy in the 1950s, Canada and the U.S. enjoyed boom times exporting their natural resources, food staples and manufactured products. Soon after high-quality light sweet crude was discovered in Alberta, the Canadian Bank of Commerce became the first bank in the country to open a specialized petroleum and natural gas department in 1950 to finance the burgeoning oil and gas industry.
The 1950s were also a time when a huge influx of new immigrants from war-torn Europe arrived in Canada. This, combined with the start of “cheap oil” and “auto culture” created massive demand for new houses in the suburbs. In 1954, banking regulation was finally relaxed to allow the chartered banks to offer residential mortgage loans. Previously, life insurers provided a vast majority of mortgages. Between 1954 and 1960, the amount of mortgage loans at the Canadian Bank of Commerce rose by almost 10 folds. In 1955, the bank opened its first “drive-thru” branch in suburban Toronto in response to the popularization of private automobiles.
The Imperial Bank of Canada
The Imperial Bank of Canada was established in March 1875 in Toronto, interestingly, by a former Canadian Bank of Commerce vice-president. Less than four months later, the Imperial Bank made it first acquisition: the Niagara District Bank in the Niagara Falls area of Ontario.
The country in the late 19th century was expanding westward itself, as the colonies west of Ontario gradually joined Canada. In 1880, the Imperial Bank opened a branch in Winnipeg, Manitoba, which had just joined the Canadian confederation. The Calgary branch opened in 1886 and the Edmonton branch in 1891, both in the province of Alberta. Despite this, the Imperial took a conservative approach to expansion, and by 1895, had a network of 18 branches. At the turn of the 20th century, the Imperial Bank gained the nickname of “Canada’s mining bank,” because of its willingness to financing the mining, timber, and paper and pulp industries.
During World War I, over 500 Imperial Bank of Canada employees left their posts to join the army. Between the Bank of Commerce and the Imperial Bank, over 2,200 employees fought overseas and sadly, over 300 of them paid the ultimate sacrifice “for King and Empire.”
After World War I, the bank rapidly opened about 50 new branches during the Roaring Twenties boom. When the Great Depression began in 1929, business tumbled across all sectors and industries. A rural Saskatchewan bank called the Weyburn Security Bank (founded 1910, with about 30 branches in Saskatchewan) decided to sell out to the Imperial Bank in 1931. During the rest of the 1930s, the Imperial’s business volume, network and number of employees contracted like many banks in the West.
Scores of Imperial Bank’s employees once again joined the Canadian army when World War II broke out in 1939. The six-year war took a devastating toll around the world, including many Canadian soldiers, but ironically lifted much of the Western world out of the economic slump.
Canada enjoyed a period of sustained growth in the 1950s and 1960s. In 1956, the Imperial acquired Barclays Bank (Canada) from its British parent.
Canadian Imperial Bank of Commerce
Following two decades of wartime and post-war boom, many Canadian businesses have “outgrown” the banks serving them. As the sizes of commercial loans continue to grow, banks found their capital base too small to adequately fund their lending. In 1961, the chairmen of the Imperial Bank of Canada and the Canadian Bank of Commerce met in secret and reached an agreement to combine the two banks. The resulting Canadian Imperial Bank of Commerce, or CIBC for short, now had 1,200 branches across Canada, the most of any bank in the country.
A very interesting part of CIBC’s history was its floating branch and airplane branch. Before the days of telephone and internet banking, the bank operated a floating branch between 1964 and 1992 along the north shore of the St. Lawrence River in Quebec to serve the remote coastal towns and villages. In 1970, the bank’s commitment to serve Canada’s isolated Nordic communities led to the creation of a “flying” branch in co-operation with NWT Air in a Douglas DC-3 plane. The plane would leave Yellowknife once a month and make five stops, covering over 2,500 kilometers. Customers wanting banking service would go to the airport on the designated day to transact. The flying branch remained in operation until 1979.
The computer age arrived in 1967 when one of CIBC’s Toronto branches became the first in the country to install a computer to electronically update customer bankbooks. Two years later, the bank introduced Canada’s first cash-dispenser machine, a predecessor of the automated teller machine.
CIBC introduced the Chargex product in 1968, providing qualifying individuals instant access to personal credit. The Chargex product became known as its current name of Visa card in 1977. With a wide array of Visa and MasterCard products, CIBC has been the leading credit card issuer in Canada for many years, though competition has been heating up in recent years.
During the mid-1990s, CIBC underwrote its own property and casualty, and life and travel medical insurance products, hoping to cross-sell auto, home and life insurance policies to its millions of bank clients. As many other banks have experienced, the strategy proved easier said than done, and CIBC exited the insurance market between 1999 and 2000.
When Canada’s “Big Bang” financial services industry deregulation went into effect in 1987, CIBC promptly established a securities underwriter named CIBC Securities Inc. Just one year later, the bank acquired a majority stake in leading investment firm Wood Gundy Inc., forming CIBC Wood Gundy. Trying to gain more access to the world’s largest capital market, CIBC took over U.S. stockbroker Oppenheimer & Co., Inc. for USD $525-million in 1997. CIBC Woody Gundy and CIBC Oppenheimer then joined forced to become CIBC World Markets.
During the mid-1990s, CIBC began underwriting its own property and casualty insurance, and life and travel medical insurance products, hoping to cross-sell auto, home and life insurance policies to its millions of bank clients. As many other banks have experienced, the strategy proved easier said than done, and CIBC exited the insurance market in 1999 and 2000.
Canada’s “Big Five” banking oligopoly appeared destined to become even more monopolistic in 1998 when the Royal Bank of Canada and the Bank of Montreal shocked the country with a proposal to merge. Months later, CIBC and the Toronto-Dominion Bank announced their own merger. Had these two deals been allowed to proceed, Canada would have been left with just two mega-banks, plus the Bank of Nova Scotia as a distant third. Both deals were quickly rejected by the government citing anti-competitive reasons.
The year 1998 also marked CIBC’s launch of a new banking concept in Canada: the partnering with leading supermarket chain Loblaws Companies Ltd. to create the President’s Choice Financial (PC Financial). PC Financial has no branches but allows customers to access their cash or do banking through hundreds of ATM machines in Loblaws supermarkets, on-line or via the telephone. Without the overhead costs of maintaining branches and branch staff, PC Financial toots its no-fee and high-savings-interest rate features. The PC Financial division gave CIBC a powerful tool to compete with ING Direct Canada (now Tangerine), which was formed just one year earlier.
CIBC then exported the idea to the U.S. in 1999, creating the Marketplace Bank with American supermarket chain Winn-Dixie, and Safeway Select Bank with Safeway. Unlike PC Financial, which proved hugely popular and profitable for CIBC, the U.S. banking market was just too different from Canada’s and too competitive for CIBC to make a profit. After more than two years of heavy losses, the U.S. division, called Amicus, was shut down in 2002.
Unfortunately, CIBC gained a dubious reputation in the 2000s as the Canadian “bank most likely to walk into sharp objects.” It wrote off CAD $1.5-billion of bad loans made to the high-tech sector during the Tech Stock Bubble in the late 1990s, then paid a USD $2.4-billion legal settlement in 2005 over its involvement with the Enron Corp. scandal. Between 2008 and 2009, CIBC wrote down its U.S. subprime mortgage securities by CAD $3-billion. This series of costly missteps knocked CIBC down to the rock bottom of the Canadian Big Five. However, CIBC continued to be sheltered by the protected and highly profitable domestic retail banking market, and the bank comparatively has fared far better than its many foreign counterparts from the global economic crisis that began in 2007.
- In 2000, CIBC exited the property and casualty insurance business by selling the CIBC General Insurance Co. and Personal Insurance Co. of Canada to Desjardins Laurentian Financial Corp. for CAD $224-million.
- In 2001, CIBC bought Merrill Lynch's Canadian retail brokerage operations for CAD $546-million. Merrill Lynch Canada had acquired a major Canadian stockbroker called Midland Walwyn for CAD $1.26-billion in 1998.
- In 2002, amidst the global tech stock collapse, CIBC sold CIBC Oppenheimer's U.S. retail operations for CAD $401-million.
- Also in 2002, CIBC combined its Caribbean operations with those of Barclays plc to create the FirstCaribbean International Bank. CIBC ended up with a 43.7% stake of FirstCaribbean International.
- In 2005 CIBC paid a USD $2.4-billion (CAD $2.92-billion) settlement over its involvement in Enron Corp.’s accounting fraud scandal.
- Between late 2006 and early 2007, CIBC bought another 47.8% of FirstCaribbean International Bank for CAD $1.40-billion (USD $1.20-billion) from Britain's Barclays plc. Following the acquisition, CIBC’s stake in FirstCaribbean International Bank rose to 91.5%.
- In early 2008, CIBC raised CAD $2.9-billion in new capital from a common stock sale amidst CAD $3.0-billion of losses from the U.S. real estate collapse.
- In August 2009, CIBC was the subject of rumours that it was in talks to buy a minority stake in Ireland's ailing Allied Irish Banks plc. However, the speculation proved to be false and it's another Canadian financial institution, Fairfax Financial, that ended up taking a 9% stake in the re-capitalization of another Irish bank, the Governor and Company of the Bank of Ireland plc in July 2011.
- In March 2010, CIBC injected USD $150-million (CAD $155-million) into Bank of N.T. Butterfield & Son Ltd., Bermuda’s largest bank. CIBC gained a 22.5% stake of the bank, whose balance sheet had been significantly weakened by the American real estate bust and global credit crisis. CIBC’s investment was part of a USD $550-million re-capitalization program led by private equity firm Carlyle Group to strengthen the Bank of Butterfield.
- In June 2010, CIBC bought the Canadian MasterCard business from Citigroup for an undisclosed amount. Citigroup’s Canadian MasterCard unit had receivables of about CAD $2.1-billion. CIBC would become a dual VISA-MasterCard issuer following the purchase.
- In July 2011, CIBC bought a 41% equity interest (10.1% voting rights) in American Century Investments from JPMorgan Chase & Co. for USD $848-million (CAD $810-million). Kansas City-based American Century had USD $112-billion under management.
- In April 2013, CIBC bought Atlantic Trust Private Wealth Management from Invesco Ltd. for USD $210-million (CAD $206-million). Atlantic Trust managed USD $20-billion of assets for high net worth clients through 12 locations, including Atlanta, Boston, Chicago and New York City.
- In December 2015, CIBC sold its 41% equity stake in American Century Investments (ACI) to Japan's Nomura Holdings Inc. for USD $1.0-billion (CAD $1.4-billion). CIBC had intended to take full control of ACI, but decided to divest the stake when ACI's other shareholders made it clear that they were not willing to give up their holdings.
- In June 2016, CIBC agreed to acquire Chicago-based PrivateBancorp, Inc. for USD $3.8-billion (USD $4.9-billion). PrivateBank has 34 offices, 1,200 employees and USD $17.7-billion in assets. The bank offers private banking, wealth management as well as mid-market commercial banking services. In addition to Chicago and Illinois, the bank also operates in Colorado, Connecticut, Georgia, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, Pennsylvania and Wisconsin.
- In March 2017, CIBC agreed to raised its offer for PrivateBancorp to USD $4.9-billion (CAD $6.6-billion). Following the election of Donald Trump as the U.S. President in late 2016, American bank stocks had soared due to the expectation of higher interest rates. Rising interest rates generally benefits banks. The shares of PrivateBancorp rose so much above CIBC's original offer that the offer faced certain rejection by PrivateBancorp's shareholders without a significant increase.
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