Whether it’s the delayed takeover of PrivateBancorp (PVTB.O), granting mortgages in the country’s priciest markets, or the Canadian consumer’s big appetite for debt, CIBC (CM.TO) Chief Executive Officer Victor Dodig is preaching prudence.
“Our shareholders always talk to us about prudence,” Dodig said in an interview with BNN when asked if CIBC’s top shareholders favour sweetening the bid for the Chicago-based lender.
Last week, a shareholder vote on the proposal was delayed until the new year in the wake of PrivateBancorp’s shares rising above the implied value of CIBC’s stock-and-cash offer (which was pegged at $4.9 billion on the day the takeover was announced). With U.S. President-elect Donald Trump’s policies seen as favourable for U.S. banks, the sector has made big gains since the election.
That surge in banking stocks is factoring in deregulation, lower corporate taxes and higher interest rates, “all of the upside in the market, and yet a lot of that is yet to be determined,” Dodig said Tuesday.
“What we’ve put on the table is very reasonable,” Dodig said of the PrivateBancorp offer.
“I think the market will settle down ... This is the right company for us and we will get there.”
CIBC recently closed the books on a blowout fourth quarter that, among other things, saw the bank lead the industry in mortgage growth in Toronto and Vancouver. While Toronto’s market continues to boom, Vancouver’s is cooling rapidly.
“We feel very comfortable with the growth we’ve seen,” said Dodig.
“Our job is to make sure we find the right clients so that we can bank them well, we can lend to them on a prudent basis, whether that’s in Vancouver, whether that’s in Toronto, whether that’s in Montreal.”
When it comes to the record debt loads Canadians are carrying, Dodig says the buzzword for him is “savings.”
“Canadians do need to continue to save more as we go into this environment where interest rates may go up,” said Dodig.
Ottawa’s latest round of mortgage tightening is “effectively telling Canadians that you should save more.”
“I’ve been vocal about being prudent on this front; being prudent as a bank and for our government to put in prudent policy.”Advertisement