As the Canadian Imperial Bank of Commerce (CIBC) marks a new chapter in its operations in Jamaica, Managing Director Nigel Holness has underscored the financial institution’s commitment to and confidence in the Jamaican market and as such, shared a slew of initiatives which the bank will embark on with a view to increasing its market presence.

In fact, Holness told
Jamaica Observer, following a symbolic rebranding ceremony at the financial institution’s head office in New Kingston last week Wednesday, that the bank has already begun pursuing implementing one such measure.

“Capital optimisation is a big part of the investment and you’ll hear more about that as…we capitalise on those opportunities in the market. So as you grow the loan book, you’re required to make sure that you shore up capital, because you have to maintain the leverage ratios,” he said.

The move to strengthen the bank’s capital base also comes at a time when local and global financial institutions are preparing for the Basel III rules to take effect in 2025, with full implementation expected by 2028. One of the stipulations of the Basel II accords is that banks with assets of US$100 billion should ensure that they have a 7 per cent capital adequacy buffer to protect against operational risks.

By ensuring it meets the capital adequacy requirement, the bank should maintain its AA- global rating from international agency Fitch and an AA rating on bank deposits and senior debt from DBRS Morningstar.

“CIBC is an AA- rated institution [and] that comes with a lot of weight. So that opens doors for us as an institution, doors that in the past weren’t available and open to us,” Holness said without going into details.

As at October 31, 2023, the bank increased its loan and advances to customers by 15.6 per cent to $88.94 billion — or nearly $12 billion over year-end 2022.

Holness pointed out that the bank is keen on financing infrastructure development projects such roadwork, airport renovations, construction and renewable energy through its corporate banking business line. Up to 2021, the regional bank has provided US$150 million in renewable energy financing.

“We are one of the leading corporate banks in that space, so we’re leveraging our experience across the region. As a matter of fact, we were talking with the Government about even looking at the blue bond, similar to what we did in Barbados. So there are discussions going on behind the scenes,” he shared.

Technology

As more Jamaican consumers decry the lack of functional automated banking machines (ABMs), the managing director said that the bank will be responding with the installation of more banking kiosks in the current calendar year.

“I mentioned that we did about 22 ABMs last year in 2023. We have about 16 that will be coming in Jamaica this year,” he told
Business Observer.

While steering clear of stating the capital outlay for the new ABMs, Holness pointed out that the investment will be significant when taking into account costs associated with installing and supporting the kiosks with remote technological infrastructure, as well as ensuring maintenance and providing security. When asked where CIBC Jamaica will add the ABMs, Holness said the bank is looking at areas that offer “economic viability” and “opportunities to grow the franchise”.

The increase in the number of ABMs will form part of a greater thrust by the bank to invest in digital channels as it seeks to become more accessible to the unbanked. In this regard, CIBC Jamaica will be working closely with its regional headquarters in Barbados to “shore up” its infrastructure to meet client needs.

“What we want to do is satisfy the customers where they are at. This is no longer us saying we are throwing a product out there to get attract a few clients. We’re doing the science, we’re looking at the data, we’re seeing what our clients are asking for and then we’re pivoting to make sure we can meet their needs. So simplification is a part of it; simplifying the client experience,” Holness stated.

Another significant component of investing in technology is the roll-out of CIBC’s called digital client onboarding which will enable customers to apply for deposit and credit accounts without going to the branch.

“That infrastructural development is far advanced and we are so hoping to now go to the [Bank of Jamaica], our regulators, for approval to launch in the market in short order,” the managing director revealed.

M

Notwithstanding the introduction of digital client onboarding initiative, customers will still be able to process transactions and make customer queries in-branch.

“So clients will still be able to come into a branch, they’ll still be able to have a conversation about their needs — education, mortgages, auto loans…So we’re going to teach our clients prudent financial management as we engage them on that face-to-face basis,” Holness explained to
Business Observer.

“Technology is part of it because that’s where banking is going, but you cannot put aside that human relationship element. It is what will differentiate you from everyone else, and that’s the road we’re taking,” he added.

As part of the bank’s financial education drive, the CIBC team has introduced its SureStart account in schools across Jamaica, teaching pupils about financial management.

At the other end of the spectrum, the company is mulling re-entering the retail investment market.

“One of the things that we’ve been looking at is, what are the demand for the different types of securities in Jamaica?” Holness said, adding that FirstCaribbean Securities exited the market because of the low issue of government bonds and smaller margins.

He conceded that retail investors are looking for more sophisticated products and so the bank is exploring how to better serve those needs.