Canadian Imperial Bank of Commerce turned to wealth-management head Victor Dodig for its next chief executive officer, eschewing outside candidates and the leader of its retail banking unit.
Dodig, 49, a Harvard Business School graduate, will take over on Sept. 15, when Gerald McCaughey, 58, retires, the Toronto-based lender said today in a statement. CIBC said in April it intended to look within and outside the bank for a new CEO after McCaughey announced that he planned to step down within the next two years.
“The market will have an easier time swallowing the fact that it’s internal because there’s less of a change,” said Kash Pashootan, portfolio manager at First Avenue Advisory of Raymond James Ltd. “The belief will be that he sees and buys into the vision that CIBC has laid out already.”
CIBC is the fourth of Canada’s six largest banks to name a new CEO within the past two years. Royal Bank of Canada’s Gordon Nixon, 57, retires tomorrow and will be succeeded by former consumer-banking head David McKay, 50, while Toronto-Dominion Bank’s Ed Clark, 66, steps down in November, with Chief Operating Officer Bharat Masrani, 58, taking over. Brian Porter, 56, became Bank of Nova Scotia’s CEO in November, replacing Richard Waugh.
Dodig said in a telephone interview that he plans to continue McCaughey’s push to be more relationship-focused, moving away from mortgage brokers in favor of originating home loans in branches, and focusing on credit cards and other products to bolster ties with customers.
Dodig, while uninterested in “transformative acquisitions,” said he’ll consider opportunities to expand the bank’s asset-management and private-wealth businesses outside of Canada.
“We don’t feel the need or the pressure to make acquisitions,” Dodig said. “We will only do them if it makes strategic sense and financial sense.”
CIBC fell 0.8 percent to C$101.21 in Toronto. The shares have gained 12 percent this year, compared with the 13 percent advance of the eight-company Standard & Poor’s/TSX Commercial Banks Index.
Dodig, who’s married with four children, got his start as a teller at a CIBC branch while attending the University of Toronto, where he earned a bachelor’s degree in commerce. He also received an MBA from Harvard.
He returned to CIBC in 2005 from UBS AG, where he headed the Zurich-based firm’s Canadian global asset-management business. Dodig became CIBC’s group head of wealth management in March 2011, after leading the lender’s retail banking distribution and sales team since 2007.
“Victor’s got lots of energy, he’s a very solid thinker,” said Michael Wilson, a former finance minister who hired Dodig while at UBS’s Canadian unit. “It was quite clear when I met him and when he first started with us at UBS that we weren’t big enough for him.”
Dodig was one of two internal candidates at CIBC along with David Williamson, head of personal and commercial banking, a person with direct knowledge of the matter said last month. Williamson joined in 2008 and has been in his current position for three years.
McCaughey’s quick departure is “a wise move” for the bank, said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier Inc. in Toronto.
“It’s hard to give up the reins unless you’re right out of the office, out of the bank,” said Nakamoto, whose firm manages about C$4.7 billion ($4.3 billion) including bank stocks. “Plus, there isn’t much in the way of a transition when the person has already been there for nine years.”
McCaughey, who became CEO in August 2005, spent most of his tenure reducing risk at CIBC, including bad bets on U.S. subprime mortgages and structured debt that cost the bank more than C$10.7 billion in writedowns from 2007 to 2009.
CIBC has underperformed competitors during McCaughey’s tenure. The bank’s shares gained about 27 percent during that period, compared with Royal Bank’s 108 percent advance, Toronto-Dominion’s 104 percent return, Scotiabank’s 77 percent climb, National Bank of Canada’s 70 percent gain and a 33 percent increase for Bank of Montreal.
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