Victor Dodig has made his wealth management strategy crystal clear. Canadian Imperial Bank of Commerce's chief executive officer is hunting for U.S. acquisitions, but won't commit to anything "transformational."
Since setting a goal of growing its wealth management earnings to at least 15 per cent of the bank's total bottom line, CIBC has looked for more U.S. deals to bolster its wealth platform south of the border. The two areas the new CEO is focusing on are private banking and asset management.
But on a conference call Thursday, Mr. Dodig reiterated that investors shouldn't expect anything too large – an acquisition will likely be something in the $1-billion to $2-billion range. His comments added extra colour to those made at a Montreal investor conference this fall.
CIBC is also conscious of just how rich valuations are for many of the available businesses today. U.S. stock markets continue their tear, and that has boosted fees earned by wealth managers. "When it comes to valuations, we recognize that they're fairly robust in the marketplace today," Mr. Dodig said.
Should CIBC strike a deal worth roughly $1-billion, Mr. Dodig believes it can large be paid for with cash. A $2-billion acquisition would likely require an equity issuance.
CIBC recently purchased a large minority stake in American Century Investments and also acquired smaller private banking specialist Atlantic Trust. Mr. Dodig is particularly keen on adding some scale to the latter investment by expanding into a few more states – and also adding some traditional banking services to the company's existing wealth clients.
But he also stressed that acquisitions aren't the major focus. "There's so much opportunity at home today that we need to continue to focus on that element of our franchise as well," he said.
Tim Kiladze