Butterfield Bank set to buy CIBC Caribbean in US$1.8 billion regional banking deal

Butterfield Bank says it has reached a US$1.8 billion deal to buy CIBC Caribbean, a move that would broaden its regional reach and form what the companies say would be the biggest independent bank focused on island economies.

CIBC Caribbean is based in Barbados, serves customers in 10 Caribbean countries, and operates as the regional arm of Canadian Imperial Bank of Commerce, widely called CIBC. The agreed purchase price includes about US$1.09 billion in cash and roughly US$703 million in Butterfield shares, putting the overall value near US$1.794 billion, equal to US$1.14 for each CIBC Caribbean share.

The companies expect the acquisition to be completed during the first half of 2027, once regulators give the necessary approvals and other standard closing requirements are met. After the sale is finalised, CIBC is projected to hold about 22 percent of the enlarged business and, at the outset, will be entitled to name two directors to Butterfield's board.

Butterfield said in a statement that the combination would create "a leading banking and wealth management platform in international financial centres and attractive Caribbean markets," with total assets of about US$29 billion.

Michael Collins, Butterfield's chairman and chief executive officer, said the proposed acquisition would mark a major shift for both banks. "Since Butterfield's 2016 listing on the NYSE, we have successfully grown and enhanced profitability through bank and trust acquisitions," Collins said. "This deal combines two storied and complementary banks, with significant local scale advantages and time-honoured customer relationships in their respective core jurisdictions."

Collins also said the purchase would reinforce Butterfield's standing as a major independent banking and wealth management group across international financial centres and Caribbean markets.

Mark St Hill, chief executive officer of CIBC Caribbean, said the transaction brings together two banks with similar priorities and a shared outlook for banking in the region. "For our clients, employees and communities, this combination brings together two organisations with shared values and a common focus on relationship banking, innovating and community impact," St Hill said.

Harry Culham also commended the leadership of the regional bank and said the deal is expected to deliver lasting value for stakeholders.

The agreement, which received unanimous approval from Butterfield's board of directors, will see Butterfield purchase CIBC Investments (Cayman), the holding company through which CIBC owns 91.7 percent of CIBC Caribbean. Butterfield will then make a mandatory takeover offer for the remaining 8.3 percent owned by minority shareholders as it seeks complete control of the regional bank.

Those minority shareholders are to receive economic terms equal to the offer made to CIBC, and they may choose to take as much as 100 percent of their consideration in Butterfield shares. Houlihan Lokey, acting as financial adviser, gave CIBC Caribbean's special committee an opinion that the proposal is fair from a financial standpoint.

Butterfield has lined up US$700 million in Tier 2 subordinated debt financing to help fund the transaction. The merged bank is expected to remain above regulatory capital requirements at closing, with a projected Common Equity Tier 1 ratio of more than 12 percent and total capital above 19 percent.

Butterfield shares will keep trading on the New York Stock Exchange and the Bermuda Stock Exchange. The bank also intends to seek listings on the Barbados Stock Exchange, the Bahamas International Securities Exchange, and the Trinidad and Tobago Stock Exchange, once regulators approve.

The Bermuda Monetary Authority will continue as Butterfield's consolidated regulator across every jurisdiction in which the bank does business.