CIBC Settles Enron Case For $2.4bn

by Glen Shapiro, LawAndTax-News.com, New York

04 August 2005

Canadian Imperial Bank of Commerce will pay $2.4 billion to settle the Enron class action led by University of California Board of Regents. This tops the $2.2bn paid by Morgan Chase and $2bn from Citgroup, and brings the total so far recovered to $7.12bn.

CIBC reported earnings of $2.2 billion in 2004 and $2.06 billion in 2003. The bank said it plans to take a pretax charge of 2.8 billion Canadian dollars (US$2.31 billion) to increase its reserves to cover the cost of Enron-related matters.

"By settling this case and maintaining what we believe are adequate reserves for our remaining Enron-related legal issues, we can better focus our energies on our other priorities," CIBC Chief Executive Gerry McCaughey said in a statement.

Other large firms that have yet to settle include Merrill Lynch, CSFB, Barclays PLC, Toronto Dominion Bank, Royal Bank of Canada, Royal Bank of Scotland and Deutsche Bank AG.

The class action against the banks, Newby, et al. v. Enron Corp., et al., was brought in the United States District Court for the Southern District of Texas, Houston Division. Apart from CIBC, Morgan Chase and Citigroup's payments, $491.5 million had previously been received from settlements with Lehman Brothers, Bank of America, Andersen Worldwide, and former Enron officials. The case is scheduled to go to trial in October 2006.

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