A story distributed on the Bloomberg last week cut to some hard truths about CIBC bank, including a suggestion that CIBC, is "considering breaking a century of banking tradition by looking for an outsider" instead of picking someone from within the bank.
Canadian banks have traditionally recruited the next CEO from within the company. Recruiting internally means the new CEO can hit the ground running and does not have to be trained in the ways of the bank. When CIBC recently announced that current chief executive officer Gerald McCaughey would step down the bank did not name a successor at the time, which is a break with tradition. Toronto-Dominion Bank, Royal Bank of Canada and Bank of Nova Scotia all announced coming change-ups in the CEO role recently. Each named a successor at the same time, all of which were from within the bank. But CIBC, breaking with tradition, is said to have hired an executive search firm that will be "looking internally and externally" for a new chief.
According to critics the company needs a bit of a shake-up.
CIBC, of course, has made some famous missteps in recent years. The bank managed to get caught up in--and lose money on--both the Enron and the sub-prime debacles. Two reported internal CIBC candidates--David Williamson, head of personal and commercial banking, Victor Dodig, overseer of wealth management—will be up against any external candidates as the bank tries to clean up its reputation. There is some way to go on that account.
Bay Street is watching the CIBC succession story with interest. The Bloomberg report delved into the "history of brutal bloodlettings" during succession battles at CIBC. The story quotes Robert Paterson, 64, a former senior vice president of the bank, as saying "CIBC was a shark pool." The refreshingly-outspoken chief investment officer of Sun Life Global Investments Inc., Sadiq Adatia, was similarly blunt. "The lack of a clear succession path at CIBC is emblematic of a bank that's always one step behind its larger peers when it comes to management, strategy and focus...CIBC's management team has always been known as second-class. CIBC has always been kind of behind the pack," Adatia was quoted as saying.
The last time a Canadian bank went outside the company for a top executive was in 1908, when RBC installed industrialist Herbert Holt as the chief.