(Toronto) Scotiabank announced Wednesday it is laying off about 3% of its global workforce, becoming the latest Canadian bank to reduce staff to adjust to ongoing economic uncertainty.
Scotia attributed the move, which affects approximately 2,700 employees, to changes within the bank and new customer preferences for their daily operations, as well as its ongoing efforts to streamline its operational processes.
Scotiabank is seeking to restore positive operating leverage and continues the strategic refresh initiated by CEO Scott Thomson, who took office in February.
Chief Financial Officer Raj Viswanathan emphasized during the bank’s last earnings conference call in August that expense management was a cornerstone of the bank and that workforce management was part of that approach, so that the bank is seeking to improve its finances.
“Our goal is always to generate positive operating leverage each year, and we hope to start doing so again in 2024,” he said.
The bank had already begun reducing its workforce at the time, reporting that its total workforce stood at 91,013 employees in the third quarter, compared to a high of 91,264 employees in the first quarter of this year.
In addition, Scotia said it would take several charges totaling $590 million after tax, or about 49 cents per share, in its fourth quarter related to its job cuts and other adjustments.
The charges include $247 million after tax for restructuring and severance provisions and $63 million after tax associated with the consolidation of certain real estate assets and the termination of certain service contracts.
They also include a 280 million after-tax impairment charge related to its investment in the Bank of Xi’an, as well as the impairment of certain intangible assets, including software.
Scotiabank noted that the market value of the Bank of Xi’an had remained below the bank’s book value for an extended period of time.
“Savings from the above are expected to be realized in FY 2024 and the full annualized benefits are expected to be realized in FY 2025,” the bank said in a statement.
Royal Bank of Canada analyst Darko Mihelic said in a note that the bank’s announcements were “a small step in the right direction” as the bank works to review its strategic direction.
He added that the write-downs were a “clean-up” of the balance sheet and the impact on capital was small.
Canada’s major banks are scrambling to manage costs to adjust to continued economic uncertainty after a cycle of unprecedented interest rate hikes.
When it released its third-quarter results earlier this year, the Royal Bank of Canada said it was working to reduce its workforce, admitting it had hired thousands of extra people. The Royal said in August that it had already reduced its workforce by about 1% and planned to cut another 1% to 2% of its staff by the end of the year.
CIBC also reported in August that it had 48,718 employees in the third quarter, down 1,709 from the fourth quarter of 2022, while Bank of Montreal reported taking a pre-tax charge of $223 million, most recent quarter, in connection with layoffs, without however specifying the number of employees affected.
Scotiabank declined to provide further details on its cuts, but noted it would disclose more when it reports fourth-quarter results on Nov. 28.