DBRS Comments on CIBC’s Redemption of Preferred Shares Series 19 & 23

DBRS has reviewed the announcement by Canadian Imperial Bank of Commerce (CIBC or the Bank) to redeem all of the outstanding Non-Cumulative Class A Preferred Shares, Series 19 and Series 23. The redemption has no rating implications for CIBC at this time.

DBRS believes this transaction will reduce the Bank’s Tier 1 capital ratio by approximately 50 basis points (bps), which still leaves the ratio at the top end of its Canadian peer group range. At the end of Q3 2010, CIBC’s Tier 1 capital ratio was 14.2%. No impact is expected on the tangible common equity to risk-weighted assets ratio, which was 9.0% at the end of Q3 2010, as DBRS already excludes preferred shares from this calculation.

Given changes in Basel capital requirements and international accounting standards, the redemption of these two series of preferred shares is not unexpected.

Headquartered in Toronto, Canada, Canadian Imperial Bank of Commerce is the fifth-largest Schedule 1 bank in Canada as measured by assets ($350 billion) at Q3 2010.

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

The principal methodologies applicable are the Global Methodology for Rating Banks and Banking Organizations (January 14, 2010), Ratings for Bank Subordinated Debt & Hybrid Capital Instruments with Contingent Risks (Apr 12, 2010), Methodology: Ratings for Bank Subordinated Debt & Hybrid Capital Instruments with Discretionary Payments (Apr 12, 2010), Rating Bank Preferred Shares and Equivalent Hybrids (June 29, 2009), and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments (February 11, 2009), which can be found on www.dbrs.com.

The sources of information used for this rating include CIBC. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.