CIBC shakes up head office

In the wake of a potential multibillion-dollar write-down on its sub-prime exposure, CIBC has rung in the New Year by handing out a few pink slips to some of its senior management, replacing them with some industry heavyweights, including Richard Nesbitt, the CEO of TSX Group.

CIBC announced early Monday that two of its most senior executives, Ken Kilgour, CIBC’s chief risk officer, and Brian Shaw, CEO of CIBC World Markets, will be leaving the company.

These two executives were in key decision-making roles that could have prevented CIBC’s exposure to U.S. sub-prime assets. Some analysts estimate that CIBC may have to write down nearly $3 billion as a result of its involvement in the sub-prime market.

Shaw is slated to be replaced by Nesbitt, who has been the CEO of the TSX Group since 2004. He will assume his role as CEO of CIBC World Markets February 29, 2008. Meanwhile, Kilgour is being immediately replaced by CIBC’s current chief financial officer, Tom Woods.

Woods’s CFO duties will also be taken over by an outsider. CIBC has hired David Williamson, formerly president and CEO of Atlas Cold Storage and CFO of Clarica Life Insurance, as the company’s new CFO. He will join CIBC January 10, 2008.

“We are pleased to have Tom Woods leading our risk function. Tom is a seasoned professional with deep knowledge and understanding of our risk profile and our strategy of consistent and sustainable growth,” said Gerry McCaughey, president and CEO of CIBC. “Richard Nesbitt and David Williamson are talented and respected executives who share CIBC’s vision of creating shareholder value by delivering consistent, solid and sustainable growth over time. We are pleased that they will be joining CIBC.”

TSX Group has announced that it does not as of yet have a replacement for Nesbitt. Nesbitt is a very well-known figure in financial services, not only for heading up the country’s largest stock exchange, but also for his relentless pursuit of a merger with the Montreal Stock Exchange, which came to fruition in December. He has also been a strong advocate for free trade in securities.

Wayne Fox, chair of TSX Group, had only praise for Nesbitt’s tenure there.

“We wish Richard every success in the next stage of his career. He has been a leader during tremendous change in the organization. He leaves behind a strong management team that will continue to execute on the organization’s growth strategy as it has in the past,” Fox said in a statement.

CIBC also intends to add two new faces to its board of directors. CIBC will nominate Nicholas D. Le Pan and Robert J. Steacy for election as members of its board of directors at the company’s Annual General Meeting on February 28, 2008.

Le Pan in particular is well-known to the investment community as the former superintendent of financial institutions for Canada from 2001 to 2006. Most recently, Le Pan was appointed by the federal government as senior expert advisor to the RCMP in its white-collar crime unit, the Integrated Market Enforcement Teams.

Steacy is a retired CFO of Torstar Corporation.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com