Wasn’t Expecting This: CIBC offloads American Century stake

Canada’s CIBC today announced it was selling its stake in wealth manager American Century Investments to Japan’s Nomura Holdings for about USD$1B after acquiring the 41% stake for about USD$848M from financial behemoth JPMorgan Chase in 2011. The bank indicated the reason for the sale was the unlikelihood of it acquiring majority control of the wealth manager…I guess Nomura is content with a minority stake or believes the status quo could possibly change. CIBC is expecting a gain of about USD$170M net of taxes from the sale.

Thankfully, the sale does not appear to signal a shift in strategy away from expanding the Bank’s private banking and wealth management presence, but does mean there will be some drag on earnings going forward until cash from this disposal is deployed (redeployment may take a while since demand for wealth management businesses had led to increased prices).

 

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