Caribbean rebrand to cost CIBC CA$27 million
The rebranding of its Caribbean subsidiary is set to cost the Canadian Imperial Bank of Commerce (CIBC) CA$27 million ($3.03 billion) or US$19.87 million as it seeks to establish one unified brand.
This was revealed in the company’s 2023 annual report released last Thursday where the brand name was previously valued at CA$27 million as an intangible asset. The decision to rebrand FirstCaribbean International Bank Limited (FCIB), typically branded as CIBC FirstCaribbean, on October 31 resulted in an impairment charge.
FCIB was formed in 2022 following the merger of CIBC West Indies Holdings and Barclays Bank PLC Caribbean. Following CIBC’s purchase of Barclay’s stake in December 2006, it was co-branded CIBC FirstCaribbean in June 2011. The last rebranding acquisition was in September 2017 when The PrivateBank became CIBC Bank USA.
“On October 31, 2023, CIBC FirstCaribbean announced its intent to rebrand as CIBC, and we therefore recognised an impairment charge of $27 million in the fourth quarter of 2023 related to the impairment of the indefinite-lived brand name intangible asset acquired as part of the CIBC FirstCaribbean acquisition,” said the annual report.
The move to rebrand as CIBC comes at a time when it is exiting the Dutch Caribbean and increasing its focus on larger Caribbean markets. It has exited Aruba, St Vincent and Grenada between February 2022 to July 2023 while its St Kitts and Dominica exits were not completed. The Dominican subsidiary ceased operations on January 31. FCIB paid CIBC US$4.87 million related to operational services in 2022.
CIBC FCIB and its subsidiary FCIB (Bahamas) Limited are set to release their fourth quarter earnings in mid-December. CIBC noted that its Caribbean segment generated 29 per cent more in total revenue of CA$2.06 billion with consolidated net profit coming in 39 per cent higher at CA$1.21 billion, $1.17 billion being attributable to shareholders. The book value of its shares in the Caribbean subsidiary was CA$2.82 billion. CIBC is set to pay shareholders a CA$0.90 dividend on January 29 to shareholders on record as of December 28.
Other big Canadian banks also released fourth quarter earnings last week with The Bank of Nova Scotia (Scotiabank) missing expectations as it reported CA$1.26 in earning per share relative to the CA$1.65 analyst estimates. This was due to higher than expected provision for credit losses which resulted in the Q4 figure dwarfing the Q3 figure of CA$1.73.
“I am encouraged by the results of our focused efforts on strengthening the bank’s balance sheet as we prepare to manage through heightened macroeconomic uncertainty. Strong capital and liquidity ratios, improving loan to deposit ratios and increased allowance for credit losses coverage ratios, position us well as we enter the next phase of our growth strategy,” said Scott Thomson, president and CEO of Scotiabank, in the quarterly release.
Scotiabank’s carrying value of its shares in 71.78 per cent controlled Scotia Group Jamaica Limited and 50.90 per cent controlled Scotiabank Trinidad and Tobago Limited marginally increased to CA$1.55 billion. In particular, the value of its Jamaican subsidiary grew by 20 per cent to CA$1.19 billion with the Trinidadian subsidiary’s value rising nine per cent to CA$916.50 million. Jamaica is set to consider a dividend payment and the publication of its fourth quarter earnings at its board meeting this Friday while the other publicly listed Scotiabank subsidiaries should publish earnings in the subsequent weeks.
The Caribbean businesses fall under the bank’s international banking segment and in the specific Caribbean and Central America (CCA) category. For Q4 2022 ending October 31, the CCA segment had revenue of CA$546 million and net profit of CA$109 million with the English Caribbean contributing 80 per cent of net earnings. This was against the backdrop of the English Caribbean contributing 54 per cent of the CA$31.9 billion in earning assets relative to Central America and the Dominican Republic which had 32 per cent and 15 per cent contributions, respectively.
In Q4 2023, the CCA segment had revenue of CA$614 million and CA$163 million in net income attributable to equity holders where the English Caribbean was responsible for 79 per cent of the net earnings with Central America delivering 13 per cent. Earnings assets stood at CA$33 billion with the English Caribbean responsible for 54 per cent of the assets. For the overall 2023 financial year, the CCA segment grew revenue 19 per cent to CA$2.56 billion with net income 62 per cent higher at CA$802 million, with CA$688 million attributable to shareholders.
The English Caribbean is defined as The Bahamas, Barbados, Jamaica, Trinidad & Tobago and Turks & Caicos while Central America is defined as Panama and Costa Rica. The English Caribbean was able to double its return on equity from 26.1 per cent to 50.4 per cent while the other CCA countries delivered between 6.7 â€“ 10.1 per cent. International banking is now overseen by group head Francisco Aristeguieta with Anya M Schnoor being the executive vice-president responsible for CCA.
Scotiabank saw a changeover in guard as former president and CEO Brian Porter retired with Thomson taking on the top role on February 1. It had announced that it was cutting three per cent of it global workforce, or 2,700 jobs, in mid-October which resulted in a CA$590-million charge in Q4. Scotiabank was able to dispose of its associate interests in Venezuelan and Thailand banks, insurance, and financial securities companies. Scotiabank shareholders are set to receive a CA$1.06 on January 29 for those on record as of January 3.