BASSETERRE, St. Kitts – THE Canadian-controlled CIBC FirstCaribbean International Bank is to write-down some $420 million in its Caribbean operations.
According to information reaching SKNVibes Business, the Canadian Imperial Bank of Commerce’s (CIBC) struggling Caribbean operations continue to show faint outlooks, with the lender recording a $420-million after-tax goodwill write-down on the operations.
A write-down is “reducing the book value of an asset because it is overvalued compared to the market value. A write-down typically occurs on a company's financial statement, when the carrying value of the asset can no longer be justified as fair value and the likelihood of receiving the cost (book value) is questionable at best”, according to INVESTOPEDIA.
“In light of persistently challenging economic conditions in many Caribbean countries and our current expectations for conditions going forward, we have reduced the carrying value of the goodwill related to CIBC FirstCaribbean,” the bank said in a statement.
According to The Globe and Mail, the bank also announced that the unit has recorded new loan losses worth some $123-million after tax.
SKNVibes Business understands that these losses were as a result of the economic meltdown of 2008 and 2009.
Although Canada’s banks have long operated in the region, a number of them doubled down on their Caribbean operations when the global economy was on fire leading up to the financial crisis.
Since the market meltdown in 2008 and 2009 however, tourism levels have suffered and loans made to develop new resorts and to fund business expansions have also suffered.
The Caribbean has been a tough market for Canadian lenders, with Royal Bank of Canada also suffering as well as the Bank of Nova Scotia to a lesser extent.
CIBC FirstCaribbean International Bank has serviced the local market for a number of years and has over 100 branches in 17 territories around the region.
