RBC, Bank of Montreal Lead 1,362 Job Cuts at Canada’s Banks
Royal Bank of Canada (RY) and Bank of Montreal led four Canadian lenders in trimming 1,362 jobs in the fiscal fourth quarter, the industry’s first employment drop in two years.
Royal Bank, Canada’s largest lender, had 585 fewer full- time employees at the end of the period, a 0.85 percent reduction from the previous quarter. Bank of Montreal, the fourth-largest, had 435 fewer workers, a 0.9 percent drop, according to company reports. Canadian Imperial Bank of Commerce’s staffing fell 0.4 percent with 186 fewer jobs for the period ended Oct. 31. Most cuts were in Canada.
This marks the first time since the fourth quarter of 2009 that net jobs declined at Canada’s eight-biggest banks. Canadian lenders are lowering costs ahead of an expected slowdown in 2012, after posting record combined profits of C$23.6 billion ($23.1 billion) this fiscal year.
“We’ve certainly seen a negative shift in the mood about the global environment,” Toronto-Dominion Bank (TD) Chief Executive Officer Edmund Clark told investors last week. “The likely net effect will be slower growth and possibly a mild recession.”
Toronto-Dominion, the second-largest lender, added 192 people in the quarter, joining increases at Bank of Nova Scotia (BNS), which bolstered ranks by 470 workers.
No Major Cuts
Canadian lenders haven’t announced any major job cuts in the past few years, and some have added staff through acquisitions. The eight banks increased their workforces by 7.2 percent this year from 2010, to 332,303 full-time equivalent positions, according to company reports.
“As a major employer in Canada, RBC’s employee numbers are influenced by many factors, including new products and services, new geographic markets, normal attrition, technology changes and overall economic growth,” said Katherine Gay, a spokeswoman for Toronto-based Royal Bank.
Bank of Montreal (BMO) spokesman Paul Deegan didn’t immediately comment.
The Bank of Canada said in a report yesterday that the country’s financial system faces a “high” risk of disruption linked to Europe’s debt crisis. Risks to stability have increased “markedly” over the past six months, the bank said. Global banks have cut more than 200,000 jobs this year, eclipsing the 174,000 in 2009, according to data compiled by Bloomberg.
“The external environment remains very uncertain,” CIBC CEO Gerald McCaughey said in a Dec. 1 conference call. “It appears the external headwinds that have negatively impacted the industry profitability are likely to continue to be with us in 2012.”
National Bank of Canada (NA), the country’s sixth-largest bank, added 97 jobs in the fourth quarter. The Montreal-based lender also said yesterday that it paid C$5 million in severance for “streamlining of certain financial market activities.” Bank spokesman Claude Breton said the number of people affected is “low”. The Globe and Mail reported the cuts affected 20 people.
“We will continue to invest in all our business lines,” National Bank Chief Financial Officer Ghislain Parent said in a telephone interview. “Of course, in 2012, I think we will be more prudent because of the uncertainties in the economy.”
“I think job cuts will be done more slowly, and with less fanfare in 2012,” said Wayne Busch, managing director, financial services for Accenture Inc. in Toronto. “The number one cost at most banks is employees.”