Buy Out Canadian Imperial Bank of Commerce (CIBC) in 2008?

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The money CIBC raised in January has quickly been claimed by the $6.5-billion in writedowns taken in the past year related to the U. S. credit crisis. More writedowns are coming this quarter. How much can CIBC sustain before it has to tap equity markets again to shore up its balance sheet? If CIBC has to go back to investors, Mr. Aiken expects it will need $3-billion or more. It would be ugly. In the best case, CIBC would heavily dilute shareholders.

There is a rumor that Manulife (http://finance.google.com...) may acquire CIBC (http://finance.google.com...). Manulife would be a keen buyer of Canada's most dismal bank if domestic financial-services mergers were ever allowed. It has taken a serious look at CIBC in the past and bought a 5% stake when the bank hit up the market for an emergency $2.9-billion equity sale in January.

What will CIBC do?

Prediction Guideline

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STEP 1:  My Prediction

	ZiiValue (chance)	MyValue (0% to 100% chance)	()	Possible Outcomes
	25%			Merged /bought out by Manulife
	1%			Merged /bought out by another
	1%			Raise cap from the market
	73%			Status quo
	1%			Other solutions (pls specify)

STEP 2:  Comment

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