Butterfield Bank has announced that it has entered into a “definitive agreement” to buy CIBC’s 91.7% interest in CIBC Caribbean. The deal, which is valued at US$1.794 billion, includes US$1,091 million in cash and US$703 million in Butterfield shares.
The boards of both CIBC and Butterfield have approved the transaction, but it still needs to be approved by Butterfield shareholders and by regulators in every jurisdiction that CIBC Caribbean operates.
Sources close to the acquisition told the Compass that preliminary talks have already been held with governments in key jurisdictions, and no major objections are expected to the deal, which will create a regional banking powerhouse with US$29 billion in assets. In its 28 May press release, Butterfield said it expected regulatory approval to be granted in the first half of 2027.
“As this process moves forward, strong regulatory standards, customer protection and long-term benefit for the Cayman Islands will remain vitally important,” said Premier and Minister for Financial Services and Commerce, André Ebanks.
“Both institutions have longstanding operations in Cayman and have played significant roles in our economy and community,” said the premier. “This combination has the potential to bolster banking and wealth management services while delivering durability and opportunity for Caymanians.”
Butterfield has indicated that CIBC Caribbean’s 2,700 employees, which are spread across 41 branches and offices in 10 jurisdictions, would not be negatively impacted by the deal. “Butterfield will maintain both organizations’ operational footprints, including CIBC Caribbean’s regional headquarters in Barbados, ensuring continuity for customers and employees,” read the press release.
Although the fact that Butterfield expects pre-tax cost savings “to reach an annual run rate of approximately $49 million once fully phased in by 2030” might raise some worries that jobs will eventually be cut.
An email sent to Butterfield customers said that once the deal has officially closed, CIBC Caribbean’s existing branches and services will be incorporated into the Butterfield brand. A letter that was sent to CIBC Caribbean staff early on Thursday morning reassured them about opportunities that would be created by the transaction.
Scale and diversification
Key figures from both institutions were keen to emphasise the benefits to customers and employees. “For our clients, employees and communities, this combination brings together two organizations with shared values and a common focus on relationship banking, innovating and community impact,” said Mark St. Hill, CEO of CIBC Caribbean. “We look forward to building on our legacy as the region’s champion in financial services.”
“The transaction will offer both scale and diversification to the benefit of all stakeholders,” said Butterfield Chairman and CEO, Michael Collins. “I look forward to welcoming our talented new colleagues and valued clients.”
It’s a significant move for CIBC, which is giving up control of a banking unit in a region where it has been present for more than a century – albeit the share component of the deal means CIBC will own approximately 22% of Butterfield and be able to appoint two directors to the board. But the Canadian bank, which reported strong fiscal second quarter results on 28 May, is expected to use the funds from the CIBC Caribbean deal to focus more heavily on affluent banking customers in North America.
The acquisition would leave Butterfield with a powerful footprint in the Caribbean. Butterfield, which is already listed on stock exchanges in New York and Bermuda, says it will also look to place secondary share listings in Barbados, the Bahamas and Trinidad and Tobago. Investors appeared to approve of the deal with Butterfield shares up 1.37% in pre-market trading on the NYSE.
In the press release Butterfield said it “will subsequently commence a mandatory take-over bid for the remaining 8.3% of total outstanding shares of CIBC Caribbean held by minority shareholders”.
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That is a major step back for CIBC Customers. Butterfiled is an inferior bank to CIBC, it has outdated processes, technology and the worst customer service of any financial institution in the Caribbean. The same way there was a mass exodus from Butterfiled when it bought HSBC, the same will happen with this deal. CIBC customers will not stand for this major step back to Butterfied, I expect RBC will be getting a lot of calls.
Butterfield is absolutely dreadful: the worst bank I have ever had the misfortune to suffer dealing with in my entire life. Their predatory and inexcusably expensive charges for everything possible, their archaic computer systems – everything is appalling. I would not inflict them upon my worst enemy.
If they buy CIBC, they will control half of residential deposits in Cayman. In a competently-run jurisdiction they would be blocked by the competition regulator, under the local competition law. Sadly, we are not a competently-run jurisdiction, and so there is no competition regulator and no competition law.