Canadian Imperial Bank of Commerce has abandoned plans to list its Caribbean business on U.S. stock markets, putting the brakes on a process that had been seen as a possible precursor to leaving the region.
Barbados-based FirstCaribbean International Bank, a CIBC subsidiary, had filed a prospectus with the U.S. Securities and Exchange Commission, aiming to raise as much as US$240-million by offering 9.6 million shares for $22 to $25 on the New York Stock Exchange. The bank currently trades on three Caribbean markets.
But the initial public offering in the U.S. failed to garner enough support, and FirstCaribbean announced in a press release on Thursday that it was withdrawing the offering “in view of market conditions at this juncture.”
Currently, CIBC owns nearly 92 per cent of FirstCaribbean, which has about US$12.4-billion in assets and earns most of its revenue in Barbados, the Bahamas and the Cayman Islands. But had the IPO been successful, CIBC intended “to divest itself of its controlling interest in us over time,” according to FCIB’s filing.
CIBC has had interests in the Caribbean since the 1920s, and FirstCaribbean’s financial performance has improved over the last few years. But Caribbean banks have given Canadian bankers their fair share of headaches, as many island countries have suffered from weak economic conditions, damaging hurricanes and money-laundering risks.
“Exploring a listing in the U.S. is an interesting avenue, but not a necessary one to advance our long-term strategy,” said CIBC spokesperson Tom Wallis, in an e-mailed statement. “FirstCaribbean continues to perform very well and is accretive to our business.”
By considering a U.S. listing, CIBC had sought a way to free up capital that could be redirected to higher priorities such as its U.S. expansion, anchored by last year’s US$5-billion acquisition of Chicago-based PrivateBancorp Inc. CIBC also considered an outright sale but refused what it saw as lowball offers. Other Canadian banks with substantial Caribbean operations – Royal Bank of Canada and Bank of Nova Scotia – were expected to watch the listing closely.
James Bradshaw