DBRS Comments on CIBC’s Acquisition of Credit Cards from Citigroup’s Canadian MasterCard Business

DBRS has today reviewed the announcement by Canadian Imperial Bank of Commerce (CIBC or the Bank) that it plans to acquire $2.1 billion of the Canadian MasterCard business from Citigroup Inc. (Citi). This acquisition has no rating implication for CIBC at this time.

DBRS believes this transaction is consistent with CIBC’s desire to accelerate growth in its core banking business. CIBC will strengthen its number one position in credit cards and become a dual credit card issuer in Canada. At the end of Q2 2010, CIBC had more than $14 billion in outstanding credit card balances.

From a credit risk perspective, non-performing accounts will be removed from the acquired portfolio and from Broadway Credit Card Trust (which has securitized certain Citi MasterCard receivables) prior to closing.

The acquisition is expected to close before October 31, 2010, pending regulatory approval and approval from the noteholders of Broadway Credit Card Trust.

Based in Toronto, Canadian Imperial Bank of Commerce is the fifth largest Schedule 1 bank in Canada as measured by assets ($336 billion) at Q2 2010.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodologies are Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessment and Rating Preferred Shares and Equivalent Hybrids, which can be found on the DBRS website under Methodologies.

This is a Corporate (Financial Institutions) rating.