Does CIBC’s mortgage arm, FirstLine, currently hold your mortgage? If so, then you’ll soon find that the name on your mortgage statement will change from FirstLine to simply, CIBC; as the bank prepares to close FirstLine’s doors.
There were rumours at the end of last year that FirstLine would be put up for sale, as CIBC wanted to leave the Toronto mortgage broker channel and keep more of its business in-house. And at the start of 2012, FirstLine was open to any interested buyers. However, after none were to be found, the bank has decided instead to just close FirstLine altogether.
“We determined that an acceptable deal to see FirstLine’s mortgage origination platform could not be reached and concluded that it is preferable to cease originations from this brand,” the bank said in a statement on Wednesday, when the closure of the mortgage branch was announced.
The statement continued on to say, “We conducted a review of our strategic options concerning FirstLine Mortgages, including a potential sale of the origination platform while keeping the portfolio and focusing on renewals through the CIBC branch network.”
CIBC also explained that part of the decision came from the fact that their in-branch mortgage services grew last year by 10 per cent – much more than the national average of 7 per cent for other banks. The mortgage service that in-house, the bank says, has better profit margins for them and they’ll be able to offer their customers more than just the one product offered by FirstLine. (However, it’s still important for homebuyers and homeowners to realize it still won’t be as many available through a broker.)
CIBC says that any homeowner currently holding a mortgage with FirstLine, and that wants to obtain a second mortgage, renew their existing, or do some home refinancing can still do so through their regular branch.
The sale of FirstLine was not possible as CIBC wanted to continue to hold onto the mortgages already obtained by the business. This would mean that the buyer would only receive the business’ name and its infrastructure and sales force, but none of its existing business. This is what most likely held up the sale, as the number of buyers for this kind of business would be limited.
Along with the announcement, CIBC also stated that while some FirstLine staff would be moved to the bank, others would be offered severance packages.