- CEO Brian Porter has been reorganizing bank amid digital shift
- Latest restructuring charge includes severances, bank says
Bank of Nova Scotia, Canada’s third-largest lender, said it will post a C$275 million ($220 million) restructuring charge to cover the cost of job cuts and other productivity enhancements as it shifts toward digital banking.
Scotiabank will take the charge of 22 cents a share in its fiscal second quarter, the Toronto-based lender said Monday in a statement. The charge includes a "number of components" with one of them being severance, spokeswoman Heather Armstrong said in an e-mail. Scotiabank is scheduled to report results May 31.
Scotiabank shares fell 1.1 percent to C$65.09 at 9:51 a.m. trading in Toronto.
Chief Executive Officer Brian Porter, 58, said earlier this month he’s reorganizing operations to address "significant ongoing shifts" by consumers toward digital banking while streamlining the lender. Those changes included unspecified job cuts across the firm, including Canadian banking and wealth management, as well as 400 jobs within information technology.
Other Canadian banks including Toronto-Dominion Bank and Canadian Imperial Bank of Commerce have recorded charges, pared jobs and changed operations as customers shift toward banking on mobile phones and away from in-branch transactions.
“The natural offshoot of those trends is the need to restructure the existing business, which makes the restructuring charge an all too regular feature of earnings season," Robert Sedran, an analyst with CIBC World Markets, said in a note to clients. "This time, it is Scotiabank’s turn."
This is the second notable restructuring cost taken by Scotiabank since Porter took over as CEO of Canada’s third-largest lender in November 2013. The bank recorded C$110 million of charges in its fourth quarter of 2014 after disclosing plans to eliminate 1,500 full-time positions, with two-thirds of those in Canada. The bank also had C$45 million in “reorganization costs” tied to its Canadian shared services business in the fourth quarter of 2015.