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Release Date: September 20, 1999

For immediate release

The Federal Reserve Board today announced its approval of the application of Canadian Imperial Bank of Commerce, The CIBC World Markets Corporation, and CIBC World Markets Inc., all of Toronto, Canada, and CIBC Delaware Holdings Inc., New York, New York, to acquire all the voting shares of CIBC National Bank, Maitland, Florida.

Attached is the Board's Order relating to this action.


Canadian Imperial Bank of Commerce
Toronto, Canada

The CIBC World Markets Corporation
Toronto, Canada

CIBC World Markets Inc.
Toronto, Canada

CIBC Delaware Holdings Inc.
New York, New York

Order Approving Formation of Bank Holding Companies and
Acquisition of a Bank

Canadian Imperial Bank of Commerce ("CIBC"), The CIBC World Markets Corporation ("World Markets Corp."), and CIBC World Markets Inc. ("World Markets Inc."), all of Toronto, Canada, and CIBC Delaware Holdings Inc., New York, New York ("Holdings") (collectively, "Applicants"), have requested the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Act") (12 U.S.C. § 1842(a)(1)) to become bank holding companies by acquiring control of all the voting shares of CIBC National Bank, Maitland, Florida ("Bank"), a de novo national bank that would deliver banking products to its customers solely through a variety of electronic delivery channels.1 Holdings would be the direct parent of Bank.

Notice of the applications, affording interested persons an opportunity to comment, has been published (64 Federal Register 40,006 (1999)). The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in section 3 of the BHC Act.

CIBC, with consolidated assets of $185 billion, is the largest banking organization headquartered in Canada.2 CIBC operates a state-licensed branch in Chicago, Illinois; agencies in New York, New York; Atlanta, Georgia; and Los Angeles and San Francisco, California; and a representative office in Houston, Texas. CIBC also engages in a broad range of permissible nonbanking activities in the United States through subsidiaries, including a subsidiary engaged in underwriting and dealing in, to a limited extent, debt and equity securities.

Competitive Considerations

The Board previously has noted that the establishment of a de novo bank enhances competition in the relevant banking market and is a positive consideration in an application under section 3 of the BHC Act.3 There is no evidence in this case that this transaction would lessen competition or create or further a monopoly in any relevant market. Accordingly, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market and that competitive considerations are consistent with approval.4

Financial, Managerial, and Supervisory Considerations

The BHC Act requires the Board to consider the financial and managerial resources and future prospects of the companies and banks involved in the proposal and certain supervisory factors. The Board has reviewed information provided by CIBC, confidential supervisory and examination information, and publicly reported financial and other information in assessing the financial and managerial strength of CIBC and its subsidiaries. CIBC's capital ratios exceed the minimum levels that would be required under the Basle Capital Accord and are considered equivalent to the capital that would be required of a U.S. banking organization. The Board has reviewed the relevant factors in light of these and all other facts of record, and concludes that the financial and managerial resources and future prospects of Applicants and Bank are consistent with approval, as are the other supervisory factors the Board must consider under section 3 of the BHC Act.

In addition, under section 3 of the BHC Act, the Board may not approve an application involving a foreign bank unless the bank is "subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in the bank's home country."5 In this case, the Board notes that the home country supervisor of CIBC is the Office of the Superintendent of Financial Institutions ("OSFI"). The Board previously has determined that several other Canadian banks were subject to comprehensive consolidated supervision by the OSFI.6 The Board finds that CIBC is supervised by the OSFI in substantially the same manner as those other banks. Based on this finding and all the facts of record, the Board concludes that CIBC is subject to comprehensive supervision on a consolidated basis by its home country supervisor.

The BHC Act also requires the Board to determine that the foreign bank has provided adequate assurances that it will make available to the Board such information on its operations and activities and those of its affiliates that the Board deems appropriate to determine and enforce compliance with the BHC Act.7 The Board has reviewed the restrictions on disclosure in jurisdictions where CIBC has material operations and has communicated with relevant government authorities concerning access to information. CIBC has committed that it will make available to the Board such information on the operations of CIBC and any of its affiliates that the Board deems necessary to determine and enforce compliance with the BHC Act, the IBA, and other applicable federal law. CIBC also has committed to cooperate with the Board to obtain any waivers or exemptions that may be necessary to enable CIBC to make such information available to the Board. In light of these commitments and other facts of record, the Board has concluded that CIBC has provided adequate assurances of access to any appropriate information the Board may request.

Convenience and Needs Considerations

The Board also has carefully considered the effect of the proposal on the convenience and needs of the communities to be served in light of all the facts of record, including a comment received from one individual ("Commenter") concerning the proper application of the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA") to Bank. As part of this review, the Board has carefully considered Bank's cooperation with the OCC in the development of Bank's community reinvestment program and the record of performance under the CRA of Canadian Imperial Bank of Commerce (New York) ("CIBC(NY)"), a New York state bank subsidiary of CIBC that was operated by CIBC from 1951 until it was voluntarily dissolved in 1996.8 In addition, CIBC operated Canadian Imperial Bank of Commerce California, a California state bank, from 1929 until it was voluntarily dissolved in 1991.

Commenter expressed concerns about the proposed business plan of Bank, under which it would deliver banking products and services to its customers through a combination of telephone, Internet, and automatic teller machine ("ATM") services. Bank would maintain pavilions at certain supermarkets in Florida and would operate at those locations under the name "Marketplace Bank."9 Bank's business plan is modeled on banking services currently offered by CIBC in Canada in association with a major Canadian supermarket chain. The pavilions would include deposit-taking ATMs, telephones connected to Bank's call center, and computers with dedicated access to Bank's Internet site. The pavilions would be available to Bank's customers whenever the host supermarket was open, and would be staffed up to 14 hours a day by Bank customer service representatives to facilitate certain customer transactions. Service representatives would not be able to accept deposits, approve loans, negotiate interest rates, or otherwise commit Bank to any banking transaction or activity. Bank customers, whether at a pavilion or elsewhere, could use Bank's call center or Internet site to review account information, transfer funds, and pay certain bills. However, customers who wish to open an account, make a deposit, or apply for a loan would have to do so in person at a pavilion.10

Bank has defined its initial assessment area for CRA purposes to be the Orlando, Florida, Metropolitan Statistical Area ("MSA"). This is consistent with Bank's expressed intention to begin operations with several pavilions in the Orlando MSA.11 CIBC has indicated that among Bank's initial product offerings would be no-fee checking accounts and unsecured consumer loans, and Bank would also offer access to home mortgages through a link to third-party bank. CIBC states that Bank has already contacted a number of local government and community groups in the Orlando area to help Bank identify the credit and other banking needs of the community. Bank intends to work closely with such groups, in Orlando and in other communities where Bank establishes pavilions. CIBC has also hired a CRA specialist and a Chief Risk Officer for Bank, each of whom has significant CRA experience.

CIBC is a large banking organization with a satisfactory record of complying with U.S. banking regulations and substantial financial and managerial resources that are sufficient to ensure compliance by Bank with all relevant regulatory requirements.12 CIBC's record of operating in the United States, including its past record of performance under the CRA, and its dealings with federal banking supervisors indicate that CIBC may be relied on to implement fully the programs and policies it has committed to implement.

The Board has carefully considered the entire record in its review of the convenience and needs factor under section 3 of the BHC Act, including information provided by Commenter and CIBC. Based on all the facts of record and for the reasons discussed above, the Board concludes that, on balance, considerations relating to the convenience and needs factor are consistent with approval of the proposal.


Based on the foregoing, and in light of all the facts of record, the Board has determined that the application should be, and hereby is, approved. Should any restrictions on access to information on the operations or activities of CIBC and its affiliates subsequently interfere with the Board's ability to obtain information to determine and enforce compliance by CIBC or its affiliates with applicable federal statutes, the Board may require termination of any of CIBC's direct or indirect activities in the United States. The Board's approval is specifically conditioned on compliance by Applicants with all the commitments made in connection with the application. For the purpose of this action, the commitments relied on by the Board in reaching its decision are deemed to be conditions imposed in writing by the Board in connection with its findings and decision and, as such, may be enforced in proceedings under applicable law.

The transaction shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months following the effective date of this order, unless such periods are extended for good cause by the Board or the Federal Reserve Bank of New York, acting pursuant to delegated authority.

By order of the Board of Governors,13 effective September 20, 1999.


Robert deV. Frierson

Associate Secretary of the Board


1 The Office of the Comptroller of the Currency (“OCC”) granted Bank a preliminary charter approval on July 9, 1999. See OCC Conditional Approval #313 (July 9, 1999). Holdings is 17 percent owned by CIBC and 83 percent owned by World Markets Inc., CIBC’s Canadian broker-dealer subsidiary, which is in turn wholly owned by World Markets Corp., a holding company wholly owned by CIBC.

2 Asset data are as of April 30, 1999, and use exchange rates then in effect, and ranking data are as of October31, 1998.

3 See Wilson Bank Holding Company, 82 Federal Reserve Bulletin 568 (1996).

4 After consummation of the proposal, Florida would be the home state of Applicants and Bank for purposes of the BHC Act and, accordingly, the proposed transaction it not barred by section 3(d) of the BHC Act. See 12 U.S.C. §§1841(o)(4), 1842(d). New York will remain the home state of CIBC for purposes of the International Banking Act (“IBA”) (12 U.S.C. §3101 et seq.) and Regulation K.

5 12U.S.C. §1842(c)(3)(B). As provided in RegulationY, the Board determines whether a foreign bank is subject to consolidated home country supervision under the standards set forth in RegulationK. See 12 C.F.R. 225.13(a)(4). Regulation K provides that a foreign bank will be considered to be subject to comprehensive supervision or regulation on a consolidated basis if the Board determines that the bank is supervised and regulated in such a manner that its home country supervisor receives sufficient information on the worldwide operations of the bank, including its relationship to any affiliates, to assess the bank's overall financial condition and its compliance with law and regulation. See 12 C.F.R. 211.24(c)(1).

6 See, e.g., Royal Bank of Canada, 83 Federal Reserve Bulletin 442 (1997); Bank of Montreal, 80 Federal Reserve Bulletin 925 (1994).

7 See 12U.S.C. §1842(c)(3)(A).

8 The performance of CIBC(NY) under the CRA was last reviewed by the FDIC on March 14, 1994, and rated “outstanding.” Since the dissolution of CIBC(NY), none of the operations of CIBC or its subsidiaries have been subject to the CRA.

9 Commenter also referred to the recent settlement of a lawsuit alleging racial and sexual discrimination against the supermarket chain that would host Bank’s pavilions. That supermarket chain is not an entity within the Board’s jurisdiction.

10 The assistance of a Bank service representative would be required to open an account or apply for a loan. Deposits could be made only through the ATMs at the pavilions.

11 Commenter expressed the view that the Orlando MSA alone might be an inappropriate assessment area for Bank, particularly if Bank operates nationally through the Internet. Although Bank would use computer technology and facilitate Internet access by its customers, Bank proposes at this time to focus its operations on the areas served by supermarket pavilions. For example, customers would be able to open accounts, apply for loans, or make deposits at Bank only through one of Bank’s pavilions. On this basis, it is consistent with the regulations implementing the CRA for Bank to define its assessment area based on the location of its pavilions with deposit-taking ATMs. See 12 C.F.R. 25.41(c)(2) (“The assessment area(s) for a bank … must … [i]nclude the geographies in which the bank has … its deposit-taking ATMs.”) See also 12 C.F.R. 228.41(c)(2). Commenter questions whether Bank’s pavilions should be considered branches. In granting preliminary approval for Bank’s charter, the OCC considered this issue and determined that under the facts of this proposal the pavilions are not branches. As Bank’s primary federal supervisor, the OCC’s decision is accorded great weight by the Board, and nothing in the record indicates that it was not based on all relevant facts or is otherwise incorrect. Moreover, in the event that the pavilions were determined to be branches, they would be at locations where it would be permissible for Bank to maintain branches.

12 Commenter also raised a number of other matters, including rumors that the supermarket chain that would host Bank’s pavilions may be sold, CIBC’s mortgage-related activities in the United States, and concerns over CIBC’s standards for purchasing mortgage-backed securities, that are unrelated to this proposal.

13 Voting for this action: Chairman Greenspan and Governors Kelley, Ferguson, and Gramlich. Absent and not voting: Governor Meyer.

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