Canada's third largest bank by assets is to outsource its letter of credit (L/C) back-office operations to the Bank of New York (BoNY). Under a multi-year agreement, clients of the Canadian Imperial Bank of Commerce (CIBC) will be able to utilise the US bank's advanced suite of Internet-enabled trade service products.

A statement issued earlier this year by BoNY said the two banks have completed the necessary systems, technology interfaces and operational procedures to begin issuing documentary credits.

This is the first major outsourcing arrangement of this scale according to BoNY that incorporates both front- and back-office systems. CIBC and its customers will be able to utilise the US bank's Internet technology, access its international trade processing expertise and global branch network. In addition to its North American processing centres, BoNY has overseas trade operations in Hong Kong, Shanghai, Seoul, Pusan, Osaka, Tokyo, Singapore, Taipei, Frankfurt and London.

For its part, BoNY is clearly looking to leverage its technological infrastructure investment to gain a substantial position in the global documentary credit market. Together with CIBC, BoNY will rank in the top three banks in North America in terms of L/C processing volumes.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.