Reuters
Thu, October 19, 2023
TORONTO (Reuters) - Canadian lender Desjardins Group said on Thursday it would cut nearly 400 jobs, mostly at its retail branches in Quebec, joining the country's big banks that have announced hundreds of layoffs citing an uncertain environment.
Desjardins said the move comes amid a tough economic environment and its efforts to save costs.
"The current economic context (volatility, inflation, slowdown, etc.) adds an additional pressure that leads us to have a healthy and prudent management," the Quebec-based bank said in a statement.
"This is all the more true in a context where we have not yet recouped all the benefits of our massive investments in recent years, particularly in technology, and we need to step up the pace in this respect."
The employees affected are spread mainly between Montreal and Lévis at the bank's retail branches, it said.
Desjardins, which has about 58,000 employees, is the latest Canadian bank to announce layoffs, joining Bank of Nova Scotia, Royal Bank of Canada and Bank of Montreal.
Canadian banks are struggling to boost profits in a high interest rate environment, which has burdened consumers and forced lenders to set aside more money in case of loan defaults.
(Reporting by Nivedita Balu; Editing by Susan Fenton)
Desjardins to lay off about 400 employees due to economic slowdown
, BNN Bloomberg
Quebec-based financial services firm Desjardins is laying off “less than 400” employees as the company deals an economic downturn and looks to recoup money from prior investments.
In a statement, a spokesperson for Desjardins told BNN Bloomberg that the layoffs will primarily affect its Montreal and Levis, Que. offices as part of “regular adjustments within different teams.”
“The current economic context adds an additional pressure that leads us to have a healthy and prudent management,” the company said in an emailed statement.
“This sound management leads us to keep a close eye on our costs, whether, for example, to take advantage of natural attrition, to assess the relevance of our vacant positions, or to ensure that our office space corresponds to the reality of hybrid working.”
The company also mentioned it had yet to recoup “all the benefits of our massive investments in recent years” and needs to “step up the pace in this respect.”
RECENT INVESTMENTS
In November 2022, Desjardins had announced plans to buy Guardian Capital’s insurance and wealth management operations for $750 million.
It also partnered with the technology consulting firm LTIMindtree a month a later.
Desjardins also bought Canadian investment manager Hexavest Inc. in 2021, which added $5 billion to its assets, in a sale with undisclosed terms.
Desjardins reported surplus earnings of $553 million for the second quarter of 2023, as it benefited from a growth in interest income fuelled by the higher interest rates.
With files from Bloomberg News
The Canadian Press
Wed, October 18, 2023
TORONTO — Scotiabank said Wednesday that it is cutting about three per cent of its global workforce, becoming the latest Canadian bank to trim staff amid continued economic uncertainty.
The bank said the cuts, which work out to around 2,700 staff, come as a result of bank digitization and automation, as well as streamlining efforts and shifting consumer preferences.
Scotiabank is moving to reduce costs as it looks to restore positive operating leverage, as well as work toward a strategic refresh initiated by CEO Scott Thomson after he stepped into the role in February.
Chief financial officer Raj Viswanathan noted on the bank's last earnings conference call in August that expense management is a cornerstone of the bank, and that managing staffing numbers is part of that approach as the bank looks to improve its finances.
"Our expectation is always to generate positive operating leverage every year, and we hope to start doing that again in 2024," he said.
The bank had already started trimming its head count at the time, reporting that its total employees stood at 91,013 employees in its third quarter, down from a peak of 91,264 in the first quarter this year.
Scotiabank said Wednesday that it would also take several charges that total $590 million after-tax, or about 49 cents per share, for its fourth quarter related to the cuts and other changes it is making.
The charges include $247 million after-tax for restructuring and severance provisions and $63 million after-tax related to the consolidation and exit of certain real estate premises and service contracts.
They also include an impairment charge of $280 million after-tax related to its investment in Bank of Xi'an Co. Ltd. as well as the impairment of certain intangible assets including software.
Scotiabank noted that the market value of Bank of Xi'an has remained below the bank's carrying value for a prolonged period.
"We expect the savings on the above items to be achieved throughout fiscal 2024 and anticipate full run-rate benefits in fiscal 2025," the bank said in a statement.
RBC analyst Darko Mihelic said in a note that the bank's announcements were "a small step in the right direction" as the bank works through a review of its strategic direction.
He said the writedowns were a "cleanup" of the balance sheet and the impact on capital is small.
Canada's big banks have been working to manage costs given the continued economic uncertainty ahead after an unprecedented interest rate cycle.
When it reported its third-quarter results earlier this year, Royal Bank of Canada said it was working to cut its employee numbers after it said it had over-hired by thousands. RBC said in August that it had already cut about one per cent of staff and it expected to cut another one to two per cent this year.
CIBC also reported in August that it had 48,718 employees in its third quarter, down 1,709 from the fourth quarter of 2022, while BMO reported it had taken a $223 million pre-tax charge in the last quarter related to layoffs, though the bank did not disclose the number of employees let go.
Scotiabank declined to provide further details on its cuts, saying it will release more in its fourth-quarter results on Nov. 28.
This report by The Canadian Press was first published Oct. 18, 2023.
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The Canadian Press
Investment experts react to Scotiabank layoffs
, BNN Bloomberg
BANK OF NOVA SCOTIA (BNS:CT)
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Investment experts say Scotiabank’s plans to lay off three per cent of its workforce are indicative of the challenging economic environment Canadian banks find themselves in.
In addition to the job cuts, Scotiabank announced Wednesday it will take on other charges that will impact its fourth-quarter earnings by approximately $590 million, or about $0.49 per share.
“The backdrop for the Canadian banks is tough,” David Burrows, president and chief investment strategist at Barometer Capital Management, said on Wednesday.
Burrows told BNN Bloomberg that the cost of capital to Canadian banks has gone up, making it more difficult for them to offer loans. Banks are also facing a “wall” of mortgage renewals in the near future, he added.
“They're looking at what the near-term results look like and they’re trying to get a little bit ahead of it,” Burrows said.
‘NOT A SURPRISE’
Laura Lau, chief investment officer at Brompton Group, told BNN Bloomberg that she expected Scotiabank to downsize its workforce, just as other big Canadian banks have done in recent months.
Over the course of the pandemic, major banks were “hiring people almost like drunken sailors,” Lau said, and the number of workers employed by the major banks grew across the board.
“It's not a surprise that they're reducing,” Lau said in a television interview on Wednesday.
“In general for banks, it makes sense for them to get rid of one to three per cent every year of their bottom performers and change their businesses.”
Lau added that general weakness in the Canadian economy likely played a role in the layoffs, as higher interest rates have put significant pressure on banks’ customers.
Burrows said it’s been a particularly challenging year for Scotiabank, noting that it’s been the weakest performing of the big six.
“It (will be) a tougher environment for them until they start seeing their net interest margins go up,” he said.
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