TD Bank, CIBC cut prime to 3.5 pct after BoC cut

Tue Dec 9, 2008 1:01pm EST TORONTO (Reuters) - Toronto-Dominion Bank (TD.TO: Quote, Profile, Research, Stock Buzz) was the first Canadian bank to lower its prime lending rate on Tuesday after the Bank of Canada delivered a surprisingly large 75 basis point cut to its key overnight rate, but TD only went so far as to chop 50 basis points off its prime rate.

The bank's retail unit, TD Canada Trust, said its prime rate will fall to 3.5 percent from 4.0 percent, effective Wednesday.

Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research, Stock Buzz) also said it would cut its prime rate by half a percentage point to 3.5 percent.

The prime rate determines rates that banks charge on a host of loans and credit products, including some mortgages.

Earlier on Tuesday, the Bank of Canada cut its overnight rate target by a steeper than expected 75 basis points, to 1.5 percent, citing significant deterioration in the outlook for the world economy. Most analysts had expected to see only a 50 basis point point cut by the central bank.