Fitch Places Canadian Imperial Bank of Commerce on Rating Watch Negative

Business Wire, Dec 19, 2007

NEW YORK -- Fitch Ratings has placed Canadian Imperial Bank of Commerce's (CIBC) 'AA-/F1+' long- and short-term Issuer Default Ratings (IDRs) on Rating Watch Negative. CIBC has significant exposure to U.S. CDOs comprised of largely subprime RMBS. This portfolio had been hedged with credit default swaps (CDS) from either highly rated banks or financial guarantors. However, a significant portion of the CDS protection ($3.5 billion) was written by a now weak financial guarantor. As disclosed today, CIBC's mark against this exposure was $2 billion at Nov. 30, 2007. This means CIBC will most likely take a significant charge in the current quarter (first quarter-2008) against this exposure. CIBC has previously taken significant marks ($777 million, net of ABX hedge gains), in fiscal 2007, against its unhedged CDO/RMBS exposures.

Aside from this exposure, CIBC's recent earnings have exhibited improving trends, with a strong performance from the Retail Markets business. Traditional asset quality measures remain quite good and liquidity is prudently managed. CIBC's Tier I risk adjusted capital ratio was comfortably in excess of regulatory requirements at 9.7% at fiscal year-end.

Fitch expects CIBC to be able to manage through this situation, despite the potentially significant earnings charges. With a good capital cushion at the present time, to the extent that any charges erode capital, Fitch expects that capital would be rebuilt quickly. In fact, this management team has already established a track record in this regard. Nevertheless, the capital markets have been challenging since the summer. CIBC previously expressed its intent to build capital, starting with the cessation of share repurchases. However, CIBC continues to rely heavily on hybrid forms of capital. Tangible common equity represented 2.74% of tangible assets (down from 2.96% at Oct. 31, 2006) and 7.31% of risk-weighted assets as of Oct. 31, 2007.

Fitch has placed the following ratings on Rating Watch Negative:

Canadian Imperial Bank of Commerce

--Long-Term IDR 'AA-';

--Senior debt 'AA-';

--Subordinated debt 'A+';

--Short-Term IDR 'F1+';

--Short-Term debt 'F1+';

--Individual 'B';

Canadian Imperial Holdings, Inc.

--Short-term 'F1+'.

Fitch has also affirmed the following ratings:

Canadian Imperial Bank of Commerce

--Support at '1'.

--Support Floor 'A-'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.