TORONTO (Reuters) - Canadian Imperial Bank of Commerce (CM.TO) said on Thursday that Chief Executive Gerry McCaughey will retire in two years, the latest in a series of leadership changes at Canada’s top lenders.
Toronto-based CIBC, Canada’s fifth-largest bank, said McCaughey, 57, will step down on April 30, 2016. The bank did not name a replacement, and said the actual date of McCaughey’s retirement could change upon the completion of a succession plan that is currently under way.
McCaughey became CEO in 2005, when the bank was licking its wounds from a series of disastrous investments during the dot-com bust and dealing with the fallout of its ties to collapsed energy trader Enron Corp. The bank ultimately agreed to pay $2.4 billion to investors to settle a lawsuit accusing the bank of helping Enron hide its debts before it collapsed in 2001.
McCaughey embarked on a plan to de-risk the bank, sharply downsizing CIBC’s once-mighty Wall Street presence, and shifting its focus away from wholesale and investment banking and toward domestic retail lending and wealth management.
McCaughey “made significant contributions to the bank, leading the firm through the financial crisis, and returning CIBC to consistent, sustainable, and profitable growth,” Barclays Capital analyst John Aiken said in a note.
While CIBC is now the least internationally exposed of Canada’s top five banks, it has in recent years made some modest acquisitions in the U.S. wealth management space, such as its 2011 purchase of 41 percent of Missouri-based American Century Investments for C$848 million ($769.06 million).
Earlier this week Reuters reported the bank and two private equity consortia are exploring offers for global asset management Russell Investments.
The announcement extends a generational changing of the guard at Canada’s top five banks, which together dominate the country’s domestic banking sector.
Brian Porter replaced Rick Waugh as CEO of Bank of Nova Scotia (BNS.TO) last fall, while Dave McKay will take the reins of Royal Bank of Canada (RY.TO) in August, replacing longtime CEO Gord Nixon. Bharat Masrani will take on the top job at Toronto-Dominion Bank (TD.TO) in November, replacing Ed Clark.
RBC, TD, and Scotiabank are the country’s top banks by assets.
Unlike its rivals, who indicated likely successors well ahead of their CEO retirement announcements, CIBC has not hinted who might replace McCaughey.
The bank said last month that Richard Nesbitt, CIBC’s chief operating officer and group head of wholesale banking, would retire in October. CIBC’s other group heads are Victor Dodig, who runs wealth management, and David Williamson, who runs the bank’s biggest division, retail and business banking.
Shareholders seemed unconcerned by the announcement, with CIBC’s stock trading up 20 Canadian cents at C$95.85 at mid-afternoon, and Aiken said he expected minimal impact to the bank’s operations.
“Although no immediate replacement has been announced, given the long runway to Mr. McCaughey’s retirement, we believe it will be a smooth transition for his replacement,” he said.
($1 = 1.1027 Canadian Dollars)
Additional reporting by Euan Rocha; Editing by Andrea Ricci and Chris Reese