CIBC has $25 billion in exposure to non-subprime securities backed by monoline bond insurers, the bank disclosed yesterday at a financial services conference in Montreal.

The admission from CIBC was widely welcomed by observers as the level of uncertainty about the bank’s exposure to the troubled monoline market disturbed investors.

CIBC has absorbed $4.2 billion in writedowns related to subprime exposure since the start of this credit mess and has been the hardest hit of Canada’s big banks. In January, CIBC aimed to stem the losses by raising $2.94 billion from a private placement in which Manulife Financial Corp., Caisse de depot et placement du Quebec, Cheung Kong Holdings Ltd. and OMERS Administration Corp. coughed up $1.5 billion and a public offering raised another $1.43 billion.

In his speech at yesterday’s conference hosted by National Bank Financial, CIBC president and CEO Gerry McCaughey said the bank is prepared for further hits to its World Markets business in the coming months. “Since January, credit spreads have remained volatile,” he said. “If current prices hold through the second quarter, we would expect the marks and valuation reserves against our financial guarantor hedges to be higher at the end of Q2.”

“It is difficult to see World Markets’ ongoing operating conditions improving in the near term,” McCaughey said, adding that the bank’s “current focus is geared towards balance sheet strength” in case it finds itself in need of cash for further writedowns.

The $25 billion in monoline exposure is guaranteed by 10 different insurers. The bank said 56% of the portfolio consists of AAA rated CLOs of senior secured loans, 28% consists of credit default swaps with investment grade underlyings and the remaining 16% is commercially-backed mortgage securities and various other items.

As of January 31, CIBC’s total exposure to the unstable U.S. residential mortgage market that is hedged with financial guarantors—should all counterparties fail and asset values slide to zero—was $5.1 billion.