* Listing planned for H1, possible as early as Q1 -sources
* Valuation would represent 30 percent discount
* CIBC has said final decision not yet made
* CIBC working with Barclays/UBS on listing -sources (Adds background on targeted valuation, prospects for listing)
By Matt Scuffham and John Tilak
TORONTO, Jan 18 (Reuters) - Canadian Imperial Bank of Commerce CM.TO is targeting a valuation of 10 times earnings for the potential listing of its FirstCaribbean business in New York, which would give it a market value of around $1.4 billion, five sources familiar with the matter told Reuters over the past week.
That would represent a 30-percent discount to FirstCaribbean's current market capitalization, based on the value of its thinly traded shares on the Barbados Stock Exchange.
Reuters reported in December that CIBC, which holds a 91.5 percent stake in FirstCaribbean, was considering listing 20 percent of the business early in 2018, and, subsequently, selling more shares. executives are willing to sell at a discount because they are conscious that perceived regulatory risks associated with the Caribbean may turn off some investors while tough economic conditions in Barbados are hampering the bank's potential for growth, two of the sources said.
The listing is expected to take place in the first half of 2018 and possibly as early as the first quarter, one of the sources said. While CIBC is pushing ahead with the listing plan, it could decide not to proceed if it fails to achieve its targeted valuation, three of the sources said.
CIBC is working with Barclays (LON:BARC) and UBS to advise it on the potential listing, three of the sources said.
The bank declined to comment on Thursday. Sources declined to be identified as the information is not public.
The bank said in December it was considering a listing of FirstCaribbean in the United States but had yet to make a decision.
FirstCaribbean reported net income of $142 million last year and would be worth just over $1.4 billion if it achieved a valuation of 10 times earnings. That compares with its current market value of $2 billion, according to FirstCaribbean's 2017 annual report, meaning the bank would be selling its 20 percent stake at a $120 million or 30 percent discount.
Two of the sources said CIBC executives first began to consider listing FirstCaribbean in New York after seeing the success of a listing by Bermuda's largest independent lender, Butterfield Bank, in September 2016.
Butterfield, which is also listed on the Bermuda Stock Exchange, raised $287.5 million through its listing, giving it a market value of $1.3 billion, roughly 10.4 times its earnings that year.
Shares in Butterfield have since risen by more than 70 percent and the business is now worth more than $2.2 billion, trading at 22 times earnings, with investors attracted by the bank's improving profitability and strong market positions in Bermuda and the Cayman Islands.
However, Butterfield does most of its business in Bermuda and the Cayman Islands, which have thriving economies, built on providing financial services for international business and luxury facilities for tourists.
FirstCaribbean also has operations in the Bahamas and Cayman Islands but its biggest market is Barbados, which has experienced an ongoing decline in its credit profile due to a mounting debt problem.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ CIBC sees proportion of profits from U.S. doubling in 3 years
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