In early 2008, CIBC issued 2.9 billion in common shares in order to firm capital. Today, CIBC announced it would raise $325 million through preferred share offerings. The shares pay 6.5% per annum and are payable quarterly. Declining asset values and increased risk of defaults of loans led management to ensure it has capital to protect itself from future losses.
CIBC obtained downside protection against a decline in its US real estate derivative holdings. Valued at 1.2 billion, CIBC agreed to pay Cerberus payments in order to ensure a value of at least 1 billion is retained. By doing so, CIBC limits its Tier-1 Capital Ratio downside to 0.45% from a maximum decline of 1.08%.
CIBC reports earnings, Indicates it may take $3 Billion in subprime writedowns.