CIBC owns already 43.7 percent of FirstCaribbean, which was formed in 2002 through the merger of the Caribbean businesses belonging to Barclays and CIBC. The remaining 12.6 percent of FirstCaribbean is publicly held.

Barclays said it expected to complete the sale in late 2006 following regulatory approval. It added in a statement that CIBC would have the option of paying for the transaction through cash, CIBC common shares or a combination of cash and shares.

Barclays said it would not be a long-term holder of any CIBC shares it acquired through the deal.

Barclays finance director Naguib Kheraj meanwhile said that FirstCaribbean had performed well since its inception.

"With the integration of the businesses complete, FirstCaribbean is now well positioned for its future development," he said in the statement.

"Barclays and CIBC both believe that the future strategy of FirstCaribbean is best pursued with one controlling shareholder and we are pleased that we have reached this preliminary agreement."