Jan. 7 (Bloomberg) -- Canadian Imperial Bank of Commerce, the country's worst-performing bank stock last year, ousted its top investment banker and chief risk officer after announcing debt writedowns of as much as $3 billion, more than any other Canadian lender.

Brian Shaw, chief executive officer of CIBC World Markets, will be replaced by TSX Group Inc. CEO Richard Nesbitt, the Toronto-based bank said today in a statement. Chief Financial Officer Tom Woods will replace Ken Kilgour as risk officer.

``Someone had to take the fall for the bank's excessive risk profile,'' said Douglas Davis, president of Davis-Rea Ltd. Investment Counsel, whose $460 million portfolio includes Canadian bank stocks. Canadian Imperial ``is trying to shore up their reputation and get back on proper footing, and probably they're doing it the right way.''

Shaw and Kilgour join an exodus of executives from the world's biggest banks and brokerages after writedowns and credit losses totaling $97 billion tied to bad U.S. mortgages. CEO Gerald McCaughey shook up Canadian Imperial's staff after Canada's fifth-biggest bank announced pretax writedowns of C$978 million ($972 million) in 2007. The bank said Dec. 19 another $2 billion writedown may be needed.

Canadian Imperial rose C$1.02, or 1.5 percent, to C$69.02 at 4:10 p.m. trading on the Toronto Stock Exchange, and has dropped 30 percent in the past 12 months. TSX Group rose 17 cents to C$52.02.

Total Costs

Citigroup Inc. CEO Charles O. Prince stepped down on Nov. 4, when the company said it may have to write down the value of its debt holdings by $8 billion to $11 billion. Merrill Lynch & Co. CEO Stan O'Neal left Oct. 30 following $8.4 billion of writedowns for subprime mortgages, asset-backed bonds and buyout loans. The No. 2-ranked executives at Morgan Stanley and Bear Stearns Cos. have also been ousted.

Canadian Imperial, which had one of the biggest U.S. investment banking units among its Canadian rivals, expanded trading of credit derivatives more rapidly than any other Canadian bank since 2006. McCaughey said in a Dec. 6 conference call that his bank ``underestimated the extent to which the subprime market might deteriorate'' which ``resulted in the buildup of exposures that are too large for CIBC's risk appetite.''

A $2 billion writedown would raise total costs from the decline in the subprime market to almost $3 billion, topping the bank's record $2.4 billion charge in 2005 to settle claims related to energy trader Enron Corp. A $3 billion charge would almost equal the bank's net income for fiscal 2007.

Montreal Merger

Nesbitt, 52, will join CIBC on Feb. 29, less than three months after TSX Group agreed to buy Montreal Exchange Inc. for about C$1.31 billion in cash and stock to combine the country's main stock and derivatives exchanges. Nesbitt, whose total compensation for 2006 was C$2.6 million, was going to be chief executive of the new TMX Group, with Montreal Exchange CEO Luc Bertrand as deputy CEO. Toronto-based TSX didn't name Nesbitt's successor. The takeover is expected to close in the first quarter.

``It's a pretty big void to fill,'' said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion. ``The company's in the middle of the biggest transaction in its corporate career, so definitely it's a blow.''

Nesbitt, who has been CEO of TSX Group for more than three years, has more than two decades of experience in the securities industry, including three years as president and CEO of HSBC Securities Canada and 10 years at CIBC Wood Gundy, where he rose to chairman and CEO.

Work Faster

``Mr. Bertrand and Mr. Nesbitt will continue to work even faster towards the closing of this deal,'' said Montreal Exchange spokesman Jean-Charles Robillard. ``Mr. Nesbitt has indicated he will be CEO until the end of February, and a lot of things will get done during that time.''

Shaw, 54, and Kilgour are the latest senior managers to leave Canadian Imperial after Phipps Lounsbery, head of debt capital markets, left in November, and former chief risk officer Steven McGirr left in July. Shaw and Kilgour worked a combined 47 years at CIBC and its predecessor banks.

David Williamson, 47, formerly president and CEO of Atlas Cold Storage and CFO of Clarica Life Insurance until they were sold, will replace Woods as CFO effective Jan. 10, the bank said.

``The most important management change is the appointment of David Williamson to CFO,'' Genuity Capital Markets analyst Mario Mendonca said today in a note to clients. ``Mr. Williamson's primary contribution to the bank may be one of selling any number of large business units within the bank, including World Markets.''

Wood Gundy

Woods, 55, has spent his entire career with Canadian Imperial, joining the Wood Gundy investment bank in 1977. He became head of Canadian corporate banking in 1996 and two years later was promoted to CFO of CIBC World Markets. Woods became CFO of Canadian Imperial in 2000 and managed the bank's finances through the Enron debacle and the subprime writedowns last year.

Canadian Imperial's announcement is the biggest management shakeup of a Canadian bank since September 2004, when Royal Bank of Canada replaced three senior bankers and hired former TSX Group CEO Barbara Stymiest following a slump in U.S. consumer banking.

Shaw was with CIBC World Markets and its predecessor, Wood Gundy, since 1985 and held a series of management positions in institutional equities before being appointed head of the unit in 1997, according to the bank's Web page. He was promoted to chairman and CEO of CIBC World Markets three years ago. Shaw, who had total compensation of C$7.3 million in fiscal 2006, wasn't available for comment today.

Risky Business

McCaughey, 51, said on Dec. 6 the bank planned to exit ``riskier'' businesses after announcing the writedowns. The bank also pledged to reduce risk in 2005 after the Enron collapse. McCaughey took over the top job a day before the bank announced its Enron costs in August 2005.

``Bringing in someone as high-profile as Mr. Nesbitt from outside indicated that he felt there was a need for somebody who wasn't associated with the situation and had sufficient credibility to make changes,'' said Gavin Graham, who helps manage about $5.8 billion at Guardian Group of Funds in Toronto, including Canadian Imperial shares.

The bank also sold the bulk of its New York-based investment bank in November to Oppenheimer Holdings Inc., halted its structured credit business and closed its leveraged finance unit in London. In December, Canadian Imperial decided to integrate commercial banking with its consumer bank, spokesman Rob McLeod said today in an interview.

Canadian Imperial will also nominate Nicholas D. Le Pan and Robert J. Steacy as board members at the company's annual meeting on Feb. 28, the bank said in a separate statement.

Le Pan, 56, served as Superintendent of Financial Institutions for Canada from 2001 to 2006. Steacy, 57, is a retired CFO of Torstar Corp., publisher of Canada's largest daily newspaper.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net; Sean B. Pasternak in Toronto at +1- spasternak@bloomberg.net.

Last Updated: January 7, 2008 16:56 EST