UPDATE 3-Canada's CIBC to pay $3.8 bln for PrivateBancorp, expand in U.S.

Wed Jun 29, 2016 11:16am EDT
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* Canadian banks look outside of Canada for growth

* Talks over deal took place over 6-8 months

* CIBC says core capital to remain over 10 percent

* CIBC shares down 3 percent, Private Bancorp up 22 percent (New throughout, adds comments from CEO, analyst, shareholders)

By Matt Scuffham and John Tilak

TORONTO June 29 (Reuters) - Canadian Imperial Bank of Commerce said it will buy Chicago-based PrivateBancorp Inc in a $3.8 billion cash-and-share deal, its biggest ever acquisition and a long-awaited expansion in U.S wealth management.

CIBC has been in talks with potential U.S. targets for some time as it looked to expand its wealth management business. The bank sees the sector as a growth area that could help offset sluggish domestic growth and a low-interest-rate environment.

Some investors are also keen for Canadian banks to lessen their dependence on a domestic market that has been hurt by the prolonged slump in oil prices.

"What we're trying to achieve for our shareholders and for our clients is to have a business with a more diversified earnings stream than just relying largely on the Canadian market," CIBC Chief Executive Officer Victor Dodig said on a conference call.   Continued...