Canadian Imperial Bank of Commerce is not alone in looking to the United States for growth opportunities.
Indeed each of the biggest Canadian banks has, in its own way, looked beyond its domestic borders in search of growth. But CIBC, unlike some others, is focused very much on business customers, and as it seeks to expand its U.S. investment banking opportunities is hewing closely to its traditional areas of expertise.
That means companies in the $200 million to $5 billion range in the health care, technology, telecommunications, consumer growth, gaming, media, power, oil and gas, industrial growth, and financial institution sectors.
"If it's outside of those areas, we generally don't do it," said Marshall A. Heinberg, the head of U.S. corporate finance for CIBC World Markets. "We have carefully selected what areas that we want to be in, and we only want to be in business where we have the full complement - from debt financing capability, equity research capability, M&A capability, and broad-domain expertise within the industry groups."
The $278 billion-asset Toronto banking company made a major inroad here when it purchased Oppenheimer & Co. Inc. in 1997. And now CIBC World Markets, one of the top three Canadian investment banks, is looking to strengthen its position.
In addition to hiring investment professionals displaced in Wall Street's current downturn, the company is honing its middle-market strategy and choosing its sector coverage carefully to offer detailed and knowledgeable advice, according to Mr. Heinberg.
Right now CIBC is targeting the wireless communications business, where Mr. Heinberg said he expects consolidation.
The company recently hired a banker with good contacts in the wireless business and an engineering background. "He wasn't just a person who knew how to do IPOs, but instead he understood what companies would work best together," Mr. Heinberg said.
CIBC's selective tactics appear to be working. According to New York data provider Dealogic, the company participated in 53 lead and co-managed initial public offerings and follow-on deals last year, ranking 11th in the number of completed deals, up from 15th in 1998.
"We did same number of public equity deals [126] in 2000 as Lehman, and one more than Morgan Stanley. And from our vantage point, that's a great success story," Mr. Heinberg said.
Mr. Heinberg said that his goal is to continue to move the franchise forward, but that CIBC has no aspirations to be at the top of the league tables. "We're not trying to become a bulge-bracket firm," he said.
According to the Thomson Financial Securities Data's preliminary data for 2001, Citigroup Inc.'s Salomon Smith Barney unit arranged $486.9 billion of sales, capturing 12% of a $4.08 trillion market to make it to No. 1. Merrill Lynch & Co., meanwhile, placed second, with $432.7 billion of sales and a 10.6% market share.
CIBC World Markets has about 1% to 2% of U.S. investment banking market share, so there is room to expand, Mr. Heinberg said.
"What we need to do is to continue to grow our client base and to do it in areas where we've already got core competencies and where we're really leveraging client relationships," he said.
But with few deals in the pipeline across the industry, bulge-bracket firms have become desperate for business and have been willing to compete on deals of any size, making middle-market competition intense.
And that includes some from rival Canadians. In October Royal Bank of Canada acquired the Boston brokerage Tucker Anthony Sutro, which it will integrate into its existing U.S. broker-dealer subsidiary, Dain Rauscher Inc.
Canadian banks are turning to the United States to build because the Canadian market is saturated and market share does not shift easily, said Michael J. Overvelde, an analyst at UBS Warburg. But though the U.S. market is less consolidated it is still very competitive, he said.
