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Breaking News: CIBC to Reportedly Sell FirstLine

CIBC-BankWe have heard from multiple reputable sources that CIBC has put its broker-lending subsidiary, FirstLine Mortgages, up for sale.

Upon sale, one of our sources states that CIBC will then exit the broker channel.

FirstLine is an iconic brand in the mortgage market. As of Q2 2011, it was the #1 broker lender and one of the biggest mortgage lenders in Canada.

Its lender market share ranking plunged to 4th in the broker channel, as of Q3 2011. That’s a direct result of CIBC favouring its retail mortgage channels (through better pricing, etc.).

firstlineCIBC has owned FirstLine since 1995, when it bought its predecessor FirstLine Trust from Manulife.

We are hearing that:

  • CIBC is hoping to complete the sale by its fiscal year-end (October 31, 2012)
  • Potential purchasers have already been made aware of this news
  • FirstLine’s mortgage book is reportedly $47+ billion (i.e., massive!)
  • CIBC will likely retain a large portion (or potentially all) of the mortgages on its books.
  • There are no plans at this stage to shut down FirstLine or eliminate its popular broker incentives (i.e., its basisPOINTS and POINTS programs)
  • Existing FirstLine customers should not be adversely affected by this news.

At this stage, no information herein is official or confirmed. We are making attempts to get a comment from CIBC, but it’s the weekend so we probably won’t get word until Monday. We do, however, believe our sources to be accurate.

While this news could have materially negative implications to the mortgage broker channel, there may be some silver lining. Monoline lenders and competing broker channel banks could see a noticeable volume pickup—at least in the short-to-medium term.

As we confirm more details, we’ll post more here and on our Twitter mortgage news feed.

Rob McLister, CMT