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Bad day for banks

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Trading in CIBC stock was temporarily halted as they announced plans to sell large chunks of stock at a 9.5% discount.  CIBC is making this move to raise $2.75 billion to rebuild their balance sheet and ‘clean up the wreckage’ from credit write downs related to the US housing  and mortgage industries.

Mean while in the USA Citigroup is taking an $18.1 billion markdown, announcing more layoffs and cutting their quarterly dividend by 41%.

On a side note the Scotiabank economic department expects lower canadian growth in the coming year citing more fallout from the subprime issue:

Home prices in the United States, Britain, France and Spain are in retreat after long booms, and “even with solid market fundamentals, the Canadian housing market is likely to show less inflationary impetus over the next two years.”

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ex-vancouverite

It's all fabulous. No problems here.

What slowdown? Real estate has record year in Canada

13 of 24 markets report double-digit price increases, led by Regina and Saskatoon

"Resale housing demand remained high throughout 2007 due to job and income growth, the continuation of attractive financing, and upbeat consumer confidence," said CREA chief economist Gregory Klump.

http://tinyurl.com/2fbh4z
…dizzying good news from the CBC.

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Londonernow

Its all good! For the Vancouver real estate market, CIBC problems (and the rest of the credit crunch) will be a positive as yet more easterners (along with the rest of the world) look to move to Vancouver after they lose their jobs.

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Anonymous

I believe the Canadian housing market crash will happen suddenly and not and outstretched debacle as it was (is) in the US.

Why take it slow when you know what's going to happen? (i.e. USA)

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solipsist

I am certain that yesterday, CIBC was offering those shares at a 6% discount. CIBC share prices rallied somewhat in response. Later reporting says -9.5%. I wonder if that was inaccurate reporting yesterday, or if CIBC is desperate.

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evergreen

The first news item that Global News reported (together with interview) at noon was CIBC's problems. Looks like it's the beginning of the end…

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Clarke

It would be nice if they clarified which region's fundamentals they were referring to. Pretty much every expert commentator (shill) that is quoted out here uses the "solid market fundamentals" line. I wonder how the current macroeconomic environment always supercedes the fundamentals of asset valuation, let alone ancillary issues like affordability and population vs. supply…..

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M-

I'm sure for this article they were talking about the Canadian market as a whole– thus, Canada's fundamentals. Not some strange city way out on the Wet Coast where buyers have gone mad…

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patriotz

even with solid market fundamentals, the Canadian housing market is likely to show less inflationary impetus over the next two years.

You can't talk about the fundamentals of "the Canadian housing market". There are two markets, the bubble West and the non-bubble East.

I do like the creative code language "less inflationary impetus", which of course means "I think prices are going to fall but I'm not allowed to say that".

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Anonymous

Would the last idiot who is wanting to buy a place in this current economic situation please hurry up and do so?

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Bizznitch

Interesting to watch the banks try work their way out of this mess that they've gotten themselves into.

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