Desjardins Group is following in the footsteps of other Canadian banks that are taking the path of rationalization in a context of slowdown. Nearly 180 people have just learned that they will lose their livelihood within the financial cooperative group, which could decide not to replace other positions left vacant.
“It’s the economic context, the volatility, the inflation, explains the spokesperson for the cooperative established in Lévis, Jean-Benoît Turcotti, on Wednesday. All of this has led us to have some thoughts and watch our costs. Over the past few weeks, we have had some tough decisions to make. »
Two sectors are mainly targeted by the cuts, which will take place within the Complexe Desjardins, in downtown Montreal. In personal services, 143 people will be made redundant. It will also eliminate 33 people on the side of the “technology group”, the sector responsible primarily for computer services.
The affected employees are “first-level” employees and managers, according to Mr. Turcotti. They should have left Desjardins by September. Prior to making these workforce reductions, the co-op also made other senior management changes. There were changes in the people who held vice-presidential positions, but it was not possible to know for certain whether this had led to involuntary departures.
With some 58,000 employees, Desjardins is the largest private employer in Quebec. The cuts affect only a small percentage of its total workforce. However, they are part of a trend seen elsewhere in the financial sector, where demand has weakened for transactions such as equity issues and services surrounding mergers and acquisitions.
On June 1, Laurentian Bank opted for a lean regime in its capital markets division – one of the financial institution’s three business lines – due to the “adverse financial environment”. We had to eliminate less than 20 positions. Also, about a week ago, The Globe and Mail reported that the Bank of Montreal had laid off about 4%, or about 100 people, of its employees in its financial markets business.
Among lenders, fears of recession are impacting demand for loans and inflationary pressures are driving up spending. They want to reverse the trend.
“We have made massive investments over the past few years and we have not yet recouped the full benefits of these investments within our business,” says Turcotti.
In 2022, “non-interest” expenses amounted to 10.6 million at Desjardins, up 11%, according to data from the cooperative’s annual report. Investments in “digital transformation” projects and “personnel costs” are among the reasons behind this growth.
Each year, between 3,000 and 4,000 employees leave Desjardins for various reasons (retirement, career change, etc.), says Mr. Turcotti. The cooperative intends to “take advantage of these departures to ask itself the question of whether or not to replace these positions” left vacant.
In a recent memo, Gabriel Dechaine, of National Bank Financial, said he expected to see banks and other sector players tighten their belts, recalling that the Royal Bank of Canada had implemented a cost reduction program .
“We expect other banks to send a similar message, which could result in restructuring charges,” the analyst said.
It is not only in Canada that the ax has fallen in the banking sector. South of the border, Goldman Sachs notably slashed 3,200 positions within its organization at the start of the year. JPMorgan Chase also eliminated dozens of jobs due to the economic climate.
Last year, Desjardins recorded surplus earnings before patronage refunds of $2.05 billion, down 23%, a result that the cooperative attributes to an increase in the load of claims in the property and casualty insurance niche, automobile insurance and goods. This trend continued during the first quarter which ended on March 31. Earnings before patronage refunds fell by 25% to 342 million.
