UDPATE 1-Fitch may cut CIBC on mortgage, guarantor exposure

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NEW YORK, Dec 19 (Reuters) - Fitch Ratings on Wednesday said it may cut its ratings on Canadian Imperial Bank of Commerce (CM.TO), citing the bank's significant exposure to residential mortgage-backed debt.

CIBC has exposures to residential mortgages via structured deals known as collateralized debt obligations, Fitch said in a statement. These exposures were hedged with a financial guarantor but this guarantor has now weakened, reducing the value of the contracts, the rating agency said.

CIBC said on Wednesday it was likely to report a large charge in its first-quarter results from protection it purchases from troubled bond insurer ACA Financial Guaranty. For details, see [ID:nN19631558].

"As disclosed today, CIBC's mark against this exposure was $2 billion at Nov. 30, 2007," Fitch said. "This means CIBC will most likely take a significant charge in the current quarter (first quarter 2008) against this exposure."

Fitch rates CIBC "AA-minus," the fourth highest investment grade. (Reporting by Karen Brettell; Editing by James Dalgleish)