CIBC to appeal U.S. court decision ordering it to pay $1.16-billion to Cerberus

is appealing a U.S. court decision that could force the lender to pay about $1.16-billion in charges after it was found liable for losses incurred by a New York hedge fund over debt deals related to the 2008 U.S. housing crisis.

Cerberus alleged CIBC defaulted on payments on a limited recourse note – a type of debt instrument that the bank issued in 2008, as well as a related transaction in 2011. Including prejudgment interest, CIBC said that it expects to pay US$848-million. That could cause the bank to record a pretax provision of $1.16-billion in its first quarter earnings, which ends Jan. 31. After tax, the bank could take a hit to its common equity tier ratio, dropping its level to 11.4 per cent from the current 11.7 per cent.

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