Canadian Banks Gain Jobs, Profit as U.S. Lenders Cut Back
Canadian banks, bolstered by profits per employee 31 percent higher than U.S. lenders, added more than 2,800 workers in the most recent quarter while Bank of America Corp. and Washington Mutual Inc. (WAMUQ) shed thousands of jobs.
For every worker hired at one of Canada’s eight main lenders in the first fiscal quarter, three were let go by their U.S. counterparts, according to bank statements and data compiled by Bloomberg. Staffing at the 10 largest U.S. banks declined by 8,577 people in about the same period, according to Bloomberg data.
Canada’s banks, ranked the world’s soundest for the past four years by the Geneva-based World Economic Forum, are at the highest level of employment in at least three years after they recorded combined profits of C$7.15 billion ($7.2 billion) in the last quarter. Earnings rose by 12 percent from a year earlier, with seven banks matching or topping analysts’ estimates.
“It’s a reflection of the underlying strength and resiliency of the banking industry in Canada, particularly when compared to the situation in other jurisdictions,” Terry Campbell, president and chief executive officer of the Canadian Bankers Association, said in a telephone interview.
Canada’s economy grew 2.5 percent last year following a 3.2 percent expansion in 2010. The country’s lenders didn’t receive any government bailouts during the financial crisis of 2008-2009 and recorded a fraction of the writedowns taken by banks and brokers worldwide.
Canadian banks have more productive employees than their U.S. rivals. Among Canadian banks with market values of at least $1 billion, every 1,000 employees brought in $19.13 million in profit in the latest quarter, according to Bloomberg data. For U.S. lenders, the total is $14.7 million.
Bank of America, the second-biggest U.S. bank, eliminated 8,718 jobs between the third and fourth quarters, part of Chief Executive Officer Brian T. Moynihan’s plan to trim expenses after revenue stagnated. Washington Mutual, which filed for bankruptcy in September, shed 2,685 jobs over the same period, while Citigroup Inc. (C) fired 1,000.
Bank of America fired almost a dozen workers in its Canadian capital markets business, a person familiar with the situation said today. The move leaves the bank with more than 100 people in the country.
Canada’s eight largest lenders, which employ about 335,000, added 20,642 people over the last year, according to Bloomberg data. The 10 largest U.S. banks that report employee headcount have increased by 17,074. The U.S. banks employ more than 1.2 million people, almost equal to the population of the Canadian province of Manitoba.
Toronto, Canada’s most populous city, employs more than 200,000 people in the financial-services sector and is the second-largest financial center in North America behind New York, according to the Toronto Financial Services Alliance.
Bank of Nova Scotia (BNS), Canada’s third-largest bank, added 1,940 jobs between Oct. 31 and Jan. 31 for a total of 77,302, according to filings on its website. The increase was mostly from the Uruguay acquisitions of Nuevo Banco Comercial and consumer-finance company Pronto!, bank spokeswoman Paula Cufre said.
Toronto-Dominion Bank, (TD) Canada’s second-largest bank, added 426 jobs in the quarter for a total of 77,786 employees. While the bank has “fluctuations” from quarter to quarter, the increase was partly due to the acquisition of Bank of America’s MBNA Canada credit-card business, said Stephen Knight, a spokesman.
TD also plans to create more than 1,600 jobs in South Carolina over the next three to five years, Knight said. Toronto-Dominion has more branches in the U.S. than in Canada.
National Bank of Canada (NA), the No. 6 bank, added 281 people during the quarter for a staff of 16,498. The increase comes “mostly” from the bank’s acquisition of HSBC Holding Plc’s Canadian investment-advisory business, said Claude Breton, a bank spokesman.
Laurentian Bank of Canada, the seventh-largest bank, increased its headcount by 307 people for a total of 3,976. Many of the new employees came from its C$199 million purchase of M.R.S. Inc. from Mackenzie Financial Corp.
Still, bank employment may not accelerate in Canada this year if profit growth slows. Bank of Montreal (BMO), the No. 4 bank, said it cut an unspecified number of jobs last month at its investment-banking unit.
Andre-Philippe Hardy, an analyst at RBC Capital Markets in Toronto, expects profit growth for the sector to fall to about 7 percent in 2012 and 8 percent in 2013 because of slowdowns in consumer banking. Profit before one-time items increased 13 percent in 2011, he said.
“It doesn’t sound like it ties into the strategy of focusing in on cost control,” said investor Greg Eckel, referring to the hiring at Canadian banks. He helps manage about C$1.2 billion at Morgan Meighen & Associates Ltd. in Toronto. “I have to believe it’s just a one-off and not a trend.”