CIBC World Markets
Encyclopedia
CIBC World Markets is the investment banking
subsidiary of the Canadian Imperial Bank of Commerce
. The firm operates as an investment bank both in the domestic and international equity and debt capital markets. The bank provides a variety of financial services including credit and capital market products, mergers and acquisitions, merchant banking and other investment banking advisory services.
Established via a series of acquisitions, including Canadian brokerage Wood, Gundy & Co.
and U.S.-based Oppenheimer & Co. CIBC World Markets has been a leading investment bank in Canada with a notable presence in various international markets at times over the years.
CIBC World Markets is headquartered in Toronto, Ontario with offices in Canada in Calgary, Alberta, Montreal, Quebec, Vancouver, British Columbia and Ottawa, Ontario. In the United States, the bank has a major office in New York, New York with additional offices in Atlanta, Georgia
, Boston, Massachusetts, Chicago, Illinois, Houston, Texas
and Salt Lake City, Utah
. Other offices internationally include: Beijing
, Dublin, Hong Kong
, London
, Shanghai
, Singapore
, Sydney
and Tokyo
.
and James Henry Gundy
. At the time of its acquisition, Wood Gundy was the leading Canadian investment dealer. Following the acquisition, the CIBC formed CIBC Wood Gundy, which offered primarily asset management services for corporate and institutional clients. Two years later, in 1990, they continued to expanded the Canadian securities business by acquiring much of Merrill Lynch & Company's Canadian business.
For a period of time, CIBC Wood Gundy operated as CIBC Eyers Reed in Australia following the acquisition of the broker-dealer.
alumni: Jay Bloom, Andrew Heyer and Dean Kehler who had worked together in Drexel's New York office in the 1980s. Argosy was founded in 1990 as a 9-person advisory firm.
The acquisition of Argosy marked an aggressive push by CIBC into the US investment banking business. Prior to that point, CIBC had never done a junk bond deal. Argosy's three major principals had worked on some of the biggest junk bond deals of the 1980s while at Drexel Burnham Lambert. The 52 Argosy employees constituted the core of what would become CIBC's High Yield Group and CIBC Argosy Merchant Banking funds that were responsible for, among other things, the $1 billion windfall that CIBC would earn from its early investments in Global Crossing
. The Argosy principals also managed two collateralized debt obligation
vehicles known as Caravelle Funds I and II.
Negotiations began talks with Oppenheimer in July 1997 and CIBC closed on the transaction in November 1997, paying $525 million over the next three years, including $175 million in retention payments to key Oppenheimer professionals. After the acquisition the U.S. division took the name CIBC Oppenheimer, eliminating the use of the Wood Gundy brand through much of the bank.
advisory services and various equity offerings for large Canadian companies. However, with the acquisition of Argosy, the center of gravity of the investment bank began to shift toward the United States.
Although initially intended to represent a foray into a variety of global markets, CIBC World Markets ultimately focused on three markets: Canada, the United States and to a lesser extent the United Kingdom. The CIBC World Markets unit suffered a net loss of C$186 million during the fourth quarter of fiscal 1998 which dragged down the performance of the parent bank's stock by almost one-third. The loss in 1998 was due primarily to very rapid expansion into regions impacted by the various financial crises in 1998 in Asia. As a result, CIBC World Markets refocused its efforts primarily on the U.S. and Canadian markets, despite the seemingly global ambitions implied in the unit's name.
CIBC World Markets reached a peak in 1999 and 2000, when the investment bank cracked the top ten of U.S. issuers of high yield bonds and the top twenty in mergers and acquisitions advisory. In 1999, CIBC World Markets, backed Gary Winnick
and his company Global Crossing
to build optical fiber cable connections under the ocean. CIBC would ultimately realize a gain of $2.0 billion from its relatively small equity investment in Global Crossing, representing more than 20% of the bank's profits in 2000. On the back of the success in Global Crossing, CIBC backed the three heads of its CIBC Argosy Merchant Banking funds in a new private equity operation known as Trimaran Capital Partners
. Trimaran closed on a $1 billion fund in April 2001, with capital provided primarily by CIBC.
In June 2001, CIBC announced the construction of a new $800 million office tower at 300 Madison Avenue (At the corner of Madison Avenue and 42nd Street). The 35-story, 1200000 square feet (111,483.6 m²) building was originally expected to house up to 3,000 employees, bringing CIBC's entire New York staff under one roof. Following the crash of the dot-com bubble and the shutdown of the high yield markets in late 2000, CIBC World Markets began to suffer a series of setbacks. When the 300 Madison building was completed in 2004, CIBC's diminished workforce took up only a few floors, leasing the remainder to PriceWaterhouseCoopers
.
and merchant banking operations, known as Trimaran Capital Partners
. Bloom, Heyer and Kehler were replaced by managing directors Edward Levy and Bruce Spohler. The Trimaran operations would subsequently spinout completely from CIBC World Markets.
By 2002 CIBC was forced to set aside C$1.5 billion for bad corporate loans, primarily from CIBC World Markets and the bank was linked two of the most famous victims of the corporate accounting scandals of the early 2000s: Enron Corporation and Global Crossing
. As a result of these developments, the parent bank implemented a strategy to reallocate resources away from the riskier CIBC World Markets division in favor of its retail operations.
As part of this strategy, in 2003, CIBC sold an asset management division along with retail brokerage to Fahnestock Viner along with the Oppenheimer & Co. name. Upon doing so CIBC Wood Gundy (in Canada) and CIBC Oppenheimer (in US) became jointly known as CIBC World Markets. The Wood Gundy
nomenclature lives on today as the retail brokerage division of CIBC World Markets Inc., however only operates in Canada; the U.S. operation lacking a retail arm. Also in September 2003, a jury found that CIBC had failed to provide complete financial information to investors in a high-yield bond offering. Just a few months later, at the end of 2003, CIBC reached an $80 million settlement with the Securities and Exchange Commission over its various financings for Enron
, representing far more than the bank had earned in fees.
In November 2007, the new Oppenheimer & Co. (Fahnestock) announced that it would purchase a major part of CIBC World Markets' U.S. Investment Banking, Corporate Syndicate, Institutional Sales and Trading, Equity Research, Options Trading and a portion of the Debt Capital Markets business which includes Convertible Bond Trading, Loan Syndication, High Yield Origination and Trading as well as related operations located in the U.K., Israel and Hong Kong. The deal closed January 14, 2008 and essentially reunited the original Oppenheimer & Co. which CIBC divided in the sale to Fahnestock.
On February 29, 2008, CIBC World Markets Chairman and Chief Executive Officer Brian Shaw was replaced in both capacities by Richard Nesbitt, a former TSX Group
CEO.
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
subsidiary of the Canadian Imperial Bank of Commerce
Canadian Imperial Bank of Commerce
The Canadian Imperial Bank of Commerce is one of Canada's chartered banks, fifth largest by deposits. The bank is headquartered at Commerce Court in Toronto, Ontario. CIBC's Institution Number is 010, and its SWIFT code is CIBCCATT....
. The firm operates as an investment bank both in the domestic and international equity and debt capital markets. The bank provides a variety of financial services including credit and capital market products, mergers and acquisitions, merchant banking and other investment banking advisory services.
Established via a series of acquisitions, including Canadian brokerage Wood, Gundy & Co.
Wood Gundy Inc.
Wood Gundy Inc. was a leading Canadian stock brokerage and investment banking firm.The firm, which was founded in 1905 was acquired by the Canadian Imperial Bank of Commerce in 1988 as it attempted to build an investment banking business. The Wood Gundy name was used extensively by the bank's...
and U.S.-based Oppenheimer & Co. CIBC World Markets has been a leading investment bank in Canada with a notable presence in various international markets at times over the years.
CIBC World Markets is headquartered in Toronto, Ontario with offices in Canada in Calgary, Alberta, Montreal, Quebec, Vancouver, British Columbia and Ottawa, Ontario. In the United States, the bank has a major office in New York, New York with additional offices in Atlanta, Georgia
Atlanta, Georgia
Atlanta is the capital and most populous city in the U.S. state of Georgia. According to the 2010 census, Atlanta's population is 420,003. Atlanta is the cultural and economic center of the Atlanta metropolitan area, which is home to 5,268,860 people and is the ninth largest metropolitan area in...
, Boston, Massachusetts, Chicago, Illinois, Houston, Texas
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
and Salt Lake City, Utah
Salt Lake City, Utah
Salt Lake City is the capital and the most populous city of the U.S. state of Utah. The name of the city is often shortened to Salt Lake or SLC. With a population of 186,440 as of the 2010 Census, the city lies in the Salt Lake City metropolitan area, which has a total population of 1,124,197...
. Other offices internationally include: Beijing
Beijing
Beijing , also known as Peking , is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010. The city is the country's political, cultural, and educational center, and home to the headquarters for most of China's...
, Dublin, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
and Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
.
History
CIBC Wood Gundy
CIBC purchased a majority stake in Wood, Gundy & Co. in June 1988 for C$203 million. Wood Gundy was established in Toronto in 1905 by George Herbert WoodGeorge Herbert Wood
George Herbert Wood was a Canadian businessman who co-founded Wood Gundy and Company, stockbrokerage in Toronto, Ontario in 1905 with fellow former Dominion Securities employee James Henry Gundy. He retired from the business in 1930 and died in 1949....
and James Henry Gundy
James Henry Gundy
James Henry Gundy was a Canadian businessman who co-founded Wood Gundy and Company, stockbrokerage in Toronto, Ontario in 1905....
. At the time of its acquisition, Wood Gundy was the leading Canadian investment dealer. Following the acquisition, the CIBC formed CIBC Wood Gundy, which offered primarily asset management services for corporate and institutional clients. Two years later, in 1990, they continued to expanded the Canadian securities business by acquiring much of Merrill Lynch & Company's Canadian business.
For a period of time, CIBC Wood Gundy operated as CIBC Eyers Reed in Australia following the acquisition of the broker-dealer.
Acqusition of the Argosy Group
In April 1995, CIBC's investment banking subsidiary, then known as CIBC Wood Gundy announced the acquisition of The Argosy Group, a New York-based investment banking firm involved primarily in the high yield debt market. Argosy had been founded by three Drexel Burnham LambertDrexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
alumni: Jay Bloom, Andrew Heyer and Dean Kehler who had worked together in Drexel's New York office in the 1980s. Argosy was founded in 1990 as a 9-person advisory firm.
The acquisition of Argosy marked an aggressive push by CIBC into the US investment banking business. Prior to that point, CIBC had never done a junk bond deal. Argosy's three major principals had worked on some of the biggest junk bond deals of the 1980s while at Drexel Burnham Lambert. The 52 Argosy employees constituted the core of what would become CIBC's High Yield Group and CIBC Argosy Merchant Banking funds that were responsible for, among other things, the $1 billion windfall that CIBC would earn from its early investments in Global Crossing
Global Crossing
Global Crossing Limited was a telecommunications company that provides computer networking services worldwide. It maintained a large backbone and offered transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and...
. The Argosy principals also managed two collateralized debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
vehicles known as Caravelle Funds I and II.
CIBC Oppenheimer
In 1997, CIBC Wood Gundy (New York) under the direction of Michael S. Rulle acquired the U.S. brokerage house Oppenheimer & Co. CIBC wanted to expand its brokerage business and was interested in the New York-based firm which had annual revenues of $800 million and a network of 680 brokers, primarily selling stocks and bonds. Oppenheimer also included a small investment banking group.Negotiations began talks with Oppenheimer in July 1997 and CIBC closed on the transaction in November 1997, paying $525 million over the next three years, including $175 million in retention payments to key Oppenheimer professionals. After the acquisition the U.S. division took the name CIBC Oppenheimer, eliminating the use of the Wood Gundy brand through much of the bank.
Creating the CIBC World Markets platform
By 1999, CIBC would scale back the usage of the Oppenheimer name in favor of CIBC World Markets. The business in Canada was centered around providing mergers and acquisitionsMergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
advisory services and various equity offerings for large Canadian companies. However, with the acquisition of Argosy, the center of gravity of the investment bank began to shift toward the United States.
CIBC World Markets reached a peak in 1999 and 2000, when the investment bank cracked the top ten of U.S. issuers of high yield bonds and the top twenty in mergers and acquisitions advisory. In 1999, CIBC World Markets, backed Gary Winnick
Gary Winnick
Gary Winnick is an American financier with a global investment career spanning three decades. He is Chairman and Chief Executive Officer of Pacific Capital Group, a diversified private investment firm founded in 1985...
and his company Global Crossing
Global Crossing
Global Crossing Limited was a telecommunications company that provides computer networking services worldwide. It maintained a large backbone and offered transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and...
to build optical fiber cable connections under the ocean. CIBC would ultimately realize a gain of $2.0 billion from its relatively small equity investment in Global Crossing, representing more than 20% of the bank's profits in 2000. On the back of the success in Global Crossing, CIBC backed the three heads of its CIBC Argosy Merchant Banking funds in a new private equity operation known as Trimaran Capital Partners
Trimaran Capital Partners
Trimaran Capital Partners is a middle-market private equity firm formerly affiliated with CIBC World Markets. Trimaran is headquartered in New York City and founded by former investment bankers from Drexel Burnham Lambert. Trimaran’s predecessors were early investors in telecom and Internet...
. Trimaran closed on a $1 billion fund in April 2001, with capital provided primarily by CIBC.
In June 2001, CIBC announced the construction of a new $800 million office tower at 300 Madison Avenue (At the corner of Madison Avenue and 42nd Street). The 35-story, 1200000 square feet (111,483.6 m²) building was originally expected to house up to 3,000 employees, bringing CIBC's entire New York staff under one roof. Following the crash of the dot-com bubble and the shutdown of the high yield markets in late 2000, CIBC World Markets began to suffer a series of setbacks. When the 300 Madison building was completed in 2004, CIBC's diminished workforce took up only a few floors, leasing the remainder to PriceWaterhouseCoopers
PricewaterhouseCoopers
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
.
Decline of CIBC World Markets
In July 2001, the Wall Street Journal profiled CIBC World Markets, chronicling the rapid decline of the bank from the peaks of Wall Street's league table rankings. At the same time, the High Yield Group was restructured with the original Argosy Group founders focusing their efforts solely on their private equityPrivate equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
and merchant banking operations, known as Trimaran Capital Partners
Trimaran Capital Partners
Trimaran Capital Partners is a middle-market private equity firm formerly affiliated with CIBC World Markets. Trimaran is headquartered in New York City and founded by former investment bankers from Drexel Burnham Lambert. Trimaran’s predecessors were early investors in telecom and Internet...
. Bloom, Heyer and Kehler were replaced by managing directors Edward Levy and Bruce Spohler. The Trimaran operations would subsequently spinout completely from CIBC World Markets.
By 2002 CIBC was forced to set aside C$1.5 billion for bad corporate loans, primarily from CIBC World Markets and the bank was linked two of the most famous victims of the corporate accounting scandals of the early 2000s: Enron Corporation and Global Crossing
Global Crossing
Global Crossing Limited was a telecommunications company that provides computer networking services worldwide. It maintained a large backbone and offered transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and...
. As a result of these developments, the parent bank implemented a strategy to reallocate resources away from the riskier CIBC World Markets division in favor of its retail operations.
As part of this strategy, in 2003, CIBC sold an asset management division along with retail brokerage to Fahnestock Viner along with the Oppenheimer & Co. name. Upon doing so CIBC Wood Gundy (in Canada) and CIBC Oppenheimer (in US) became jointly known as CIBC World Markets. The Wood Gundy
CIBC Wood Gundy
CIBC Wood Gundy is the is the Canadian retail brokerage division of CIBC World Markets, a division of the Canadian Imperial Bank of Commerce.CIBC Wood Gundy maintains a network of 1,400 brokers working in over 100 branches across Canada...
nomenclature lives on today as the retail brokerage division of CIBC World Markets Inc., however only operates in Canada; the U.S. operation lacking a retail arm. Also in September 2003, a jury found that CIBC had failed to provide complete financial information to investors in a high-yield bond offering. Just a few months later, at the end of 2003, CIBC reached an $80 million settlement with the Securities and Exchange Commission over its various financings for Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
, representing far more than the bank had earned in fees.
Sale to Oppenheimer & Co. (Fahnestock Viner)
By 2004, CIBC had begun winding down much of its investment banking business in the United States. CIBC World Markets reduced its staff by two-thirds from 2001 through 2004.In November 2007, the new Oppenheimer & Co. (Fahnestock) announced that it would purchase a major part of CIBC World Markets' U.S. Investment Banking, Corporate Syndicate, Institutional Sales and Trading, Equity Research, Options Trading and a portion of the Debt Capital Markets business which includes Convertible Bond Trading, Loan Syndication, High Yield Origination and Trading as well as related operations located in the U.K., Israel and Hong Kong. The deal closed January 14, 2008 and essentially reunited the original Oppenheimer & Co. which CIBC divided in the sale to Fahnestock.
On February 29, 2008, CIBC World Markets Chairman and Chief Executive Officer Brian Shaw was replaced in both capacities by Richard Nesbitt, a former TSX Group
TSX Group
The TMX Group Inc. owns and operates stock exchanges, the Toronto Stock Exchange , and the TSX Venture Exchange , formerly known as the Canadian Venture Exchange , the Montreal Exchange, the Natural Gas Exchange and the Boston Options Exchange...
CEO.
Notable current and former employees
- Richard NesbittRichard NesbittRichard William Nesbitt is a Canadian financial executive. He became CEO of CIBC World Markets on February 29, 2008, replacing former CIBC World Markets head Brian Shaw....
, CEO of CIBC World Markets - Gerald T. McCaugheyGerald T. McCaugheyGerald T. McCaughey is the president and CEO of the Canadian Imperial Bank of Commerce.-Early years:...
, president and CEO of the Canadian Imperial Bank of Commerce, former CEO of CIBC World Markets - Henry BlodgetHenry BlodgetHenry Blodget is an American former equity research analyst, currently banned from the securities industry, who was senior Internet analyst for CIBC Oppenheimer during the dot-com bubble and the head of the global Internet research team at Merrill Lynch...
, equity research analyst. - Meredith WhitneyMeredith WhitneyMeredith Ann Whitney is a banking analyst and frequent contributor to CNBC, Fox Business, and Bloomberg News programs. Based in New York City, Whitney manages her own advisory firm, Meredith Whitney Advisory Group LLC, where she produces company-specific equity research on financial institutions...
, equity research analyst. - Guy AdamiGuy AdamiGuy Adami is a TV personality, author, financial analyst, & a professional investor. He is one of the original "Fast Money Five" on the show Fast Money . In 2008 he joined optionMONSTER with Pete Najarian and Jon Najarian as the lead analyst for equities research. He also came on board as managing...
, TV personality, author, financial analyst and professional investor - Jeff RubinJeff RubinJeff Rubin is a Canadian economist and author. He is a former chief economist at CIBC World Markets.Rubin graduated from McGill University with a Masters in Economics after completing his Economics B.A. at University of Toronto...
, former chief economist, author of Why Your World Is About to Get a Whole Lot Smaller.