CIBC to Sell Caribbean Arm for $1.6 Billion, Buy Back Shares — Update

By Robb M. Stewart

Canadian Imperial Bank of Commerce is selling its Caribbean banking arm for roughly $1.6 billion as it looks to shift capital toward growth efforts in North America.

The bank, one of Canada's largest lenders, also unveiled plans to launch a share buyback program alongside quarterly financial results that included a 23% jump in net income and expansion in return on equity from a year ago.

CIBC said it has agreed to sell its 91.7% interest in CIBC Caribbean to Bank of N.T. Butterfield & Son for $1 billion of cash and 52.1 million Butterfield shares, currently valued at $645 million.

The deal will bring together banking and wealth management companies in the region to create a financial institution with roughly $29 billion in assets. When the sale is completed, CIBC will secure a minority stake in Bermuda-based Butterfield of about 22%.

New York-listed Butterfield said it will maintain both organizations' operational footprints, including CIBC Caribbean's regional headquarters in Barbados. The transaction will bring scale and diversification, and will offer clients of the merged business greater ability to process cross-border payments, along with increased consumer and merchant banking services, it said. Butterfield plans to launch a mandatory takeover bid of the outstanding CIBC Caribbean shares held by minority investors.

For CIBC, the sale will strengthen its capital position, with its common equity Tier 1 ratio expected to increase by 0.24 percentage point on top of a buffer than already sits well above the regulatory minimum. The Canadian lender said it expects to book a charge of about 350 million Canadian dollars, equivalent to about $254 million in the U.S., in the current quarter in connection with the transaction, which is set to close in the first half of 2027 subject to approval from regulators and Butterfield's shareholders.

Alongside news of the Caribbean deal, CIBC said it plans to buy back up to 30 million of its shares, about 3.3% of the outstanding number. It will file a notice of its intention to launch a normal course issuer bid with the Toronto Stock Exchange, which would allow it to buy back stock over a one-year period.

The buyback, which comes after the bank bought for cancellation some C$1.89 billion of its shares in the first half of its fiscal year, adds to the push to boost shareholder returns by each of Canada's largest banks after a strong quarter for their core operations.

CIBC recorded second-quarter net income of C$2.47 billion, or C$2.53 a share, for the three months ended April 30, against C$2.01 billion, or C$2.04, a year earlier. On an adjusted basis, per-share earnings rose to C$2.54, beating the C$2.46 mean estimate of analysts polled by FactSet.

Return on equity, a measure of profitability and efficiency, widened to 16.4% from 13.8% in the same period last year.

Total revenue for the second quarter increased 14% to C$8.01 billion, ahead of the C$7.96 billion analysts anticipated.

The rise in net income was driven by growth in CIBC's capital markets arm, as well as strength in U.S. commercial banking and wealth management. Income was also up in its Canadian personal and business banking arm, and Canadian commercial banking and wealth management operations.

CIBC's provision for credit losses stood at C$605 million in the latest quarter, steady on a year ago but up by C$37 million from the prior quarter. Year-over-year, its provision for credit losses on performing loans was down due to what it said was a less unfavorable change in its economic outlook, while the provision on impaired loans rose with increased provisions for its Canadian operations.

The bank's common equity Tier 1 capital ratio stood at 13.6% for the three-month period. The country's banking regulator requires the big banks to hold a capital ratio of no less than 11.5% of risk-weighted assets.

Write to Robb M. Stewart at robb.stewart@wsj.com

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May 28, 2026 12:42 ET (16:42 GMT)