Haditaghi: Possible loss of CIBC is a big deal!

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CIBC’s departure from the broker channel -- through its sale of FirstLine -- would be anything but insignificant, suggests the founder of Pacific Mortgage Group.

“Unless a deposit-taking entity with a great rating or big balance sheet buys FirstLine, it will be a massive loss,” Alex Haditaghi told MortgageBrokerNews.ca. “It’s not good for our industry to lose a funding source like CIBC, with its access to deposits, covered bonds, MBS, CMB giving it the ability to fund $15 billion per year.”

The comment is an answer of sorts to brokers inclined to dismiss as insignificant the possible loss of CIBC. That’s if, in fact, it secures a buyer for FirstLine.

Many have suggested the industry would suffer few negative consequences, even if FirstLine ceased to write new mortgages, with only its existing book sold on to another lender. They point to the lender’s continuing slip in broker market share and pricing that has in many instances followed – and not led, as it once did – the industry.

The loss of FirstLine, which CIBC acquired from Manulife, is something several brokers across the industry had already begun to brace for, given the lender’s decision earlier this month to cut the BFS segment from its product line.

As MortgageBrokerNews.ca reported this week,  industry sources are now confirming CIBC is moving to put FirstLine on the market – what CAAMP CEO Jim Murphy calls  “strictly a business decision.”

That sale could have a significant downside for the industry, said Haditaghi, if a player of similar size and lending power doesn’t step in to take CIBC’s place.

Still, that kind of replacement is a possibility, he said.

“I do, however, expect this might be an opportunity for a foreign bank, a pension fund or an insurance company and someone will make a play for it,” Haditaghi told MortgageBrokerNews.ca.
 

  • Eric Putnam, Debt Coach Canada on 2012-03-09 4:09:30 AM

    CIBC executives acknowledged during quarterly conference call today they are considering sale of Firstline unit. The bank said Thursday the efforts to sell FirstLine are part of a bid to bring mortgage sales inside branches. “Until a strategic decision is made, we will continue to originate new mortgages in the FirstLine channel” CIBC said.

    http://www.theglobeandmail.com/globe-investor/cibc-profit-rises-eyes-sale-of-mortgage-broker-unit/article2362579/

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