CIBC to acquire $2.1 billion Canadian MasterCard portfolio from Citigroup

CEO Gerry McCaughey says acquisition strengthens CIBC's leading credit card business in Canada and supports growth strategy of core Canadian franchise

TORONTO, June 14 /CNW/ - CIBC, the leading credit card issuer in Canada, announced today that it is broadening its reach in the Canadian marketplace through the acquisition of a $2.1-billion credit card portfolio from Citigroup's ("Citi") Canadian MasterCard business. Through this transaction, CIBC, which had more than $14 billion in outstanding credit card balances at April 30, 2010, will become the largest dual credit card issuer in Canada.

"This acquisition is directly aligned with our strategy to grow our core Canadian operations," said Gerry McCaughey, President and Chief Executive Officer of CIBC. "It will further strengthen our highly successful credit card business by broadening our client base and diversifying our credit card portfolio."

"This is the right risk-aligned way to grow our credit card business in Canada and further strengthen our leading position," added McCaughey. "With our scale, platform and operating synergies, combined with our expertise in credit cards, we are confident this transaction furthers our strategic growth objectives."

The transaction is expected to be accretive to CIBC's earnings during the first year following its closing. In addition, prior to closing, non-performing accounts will be removed from the acquired portfolio and from Broadway Credit Card Trust ("the Trust"), which has securitized certain Citibank MasterCard receivables.

The MasterCard portfolio that CIBC will acquire includes accounts associated with co-branded Petro Canada credit cards that offer the "Petro Points" rewards program.

"We have always believed that choice, loyalty and rewards are important to our clients," said Sonia Baxendale, President of CIBC Retail Markets. "We are pleased that through this transaction, CIBC will become the largest dual credit card issuer of Visa and MasterCard products in Canada, which will allow us to offer even more choice to our clients."

"Once the transaction closes, we look forward to welcoming these new clients to CIBC and showing them the many advantages of building a broader banking relationship with us," added Baxendale.

This is the third transaction CIBC has undertaken since early March including the acquisition of the remaining 50 per cent of CIT Business Credit Canada and the purchase of a minority stake in Bermuda-based The Bank of N.T. Butterfield & Son Limited.

"We have had these transactions on our target list for an extended period of time," said McCaughey. "We are very pleased that we have been able to realize all three in such a short period and believe that they will add to our franchise given their linkages and connectivity to our core businesses."

Completion of the credit card portfolio acquisition is subject to certain conditions, including obtaining regulatory approval and approval from the note holders of the Trust. These conditions are expected to be satisfied before the end of CIBC's fourth fiscal quarter on Oct. 31, 2010.

Under the terms of the transaction, CIBC will acquire all of the outstanding Class B notes, Class C notes and Series Enhancement Notes issued by the Trust and will assume the servicing and associated responsibilities in respect of the Trust. The Class B notes are rated A2 by Moody's and A by DBRS. The Class C notes are rated Baa1 by Moody's and BBB by DBRS.

CIBC is a leading Canadian-based global financial institution. Through its two main operating groups, CIBC Retail Markets and Wholesale Banking, CIBC provides a full range of financial products and services to almost 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. CIBC is amongst the best capitalized banks in the world with a Tier 1 ratio of 13.7 per cent at April 30, 2010.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this press release report, in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission and in other communications. These statements include, but are not limited to, statements about the proposed acquisition of a $2.1 billion credit card portfolio from Citi's Canadian MasterCard business as well as our operations, business lines, financial condition, risk management, priorities, targets, ongoing objectives, strategies and outlook. Forward-looking statements are subject to inherent risks and uncertainties that may be general or specific. A variety of factors, many of which are beyond our control, could cause actual results to differ materially from the expectations expressed in any of our forward-looking statements including the possibility that the proposed transaction does not close when expected or at all, or that CIBC and Citi may be required to modify aspects of the transaction to obtain the required approvals. We do not undertake to update any forward-looking statement except as required by law.

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