Canadian Imperial (CM) Signs Deals to Offload US Office Loans

Core Viewpoint - The current exposure of banks to office loans is problematic, leading them to seek divestment even at discounted prices [1][4]. Group 1: Company Actions - Canadian Imperial Bank of Commerce (CM) has signed agreements to divest U.S.-based office loans valued at $316 million, backed by eight offices in cities like San Francisco and Seattle [1]. - CM is expected to announce its second-quarter fiscal 2024 results on May 30, which may include details about the loan sale [2]. - In the first quarter of fiscal 2024, CM reported a significant decline in earnings due to a 98% increase in provisions for credit losses [2]. Group 2: Industry Trends - The U.S. office vacancy rates are at record highs, contributing to financial difficulties for banks [4]. - Banks are reducing their exposure to commercial real estate (CRE) loans and are actively looking to sell loans to alleviate pressure on their portfolios [5]. - Regulatory scrutiny has increased for banks with CRE portfolios exceeding three times their capital or those that have grown by at least 50% in the past three years [5]. Group 3: Other Company Activities - WaFd, Inc (WAFD) has also entered an agreement to sell 2,000 commercial multi-family real estate loans to Bank of America for $2.9 billion, with an unpaid principal balance of $3.2 billion [6].