Laurentian Bank of Canada announced plans Wednesday to close dozens of branches and cut about 300 staff, becoming the latest Canadian bank to take action as consumers move to computers and smartphones to make their regular financial transactions.
In a statement that called the traditional bank operating model “obsolete,” Laurentian’s chief executive officer François Desjardins said: “We necessarily have to adapt our retail services in light of this reality to optimize our operating efficiency, while meeting the changing demands of our customers.”
The move follows similar actions by a number of Laurentian’s larger peers in the banking sector as they, too, react to declining traffic in traditional branches and surging costs associated with the development of mobile technology.
As a result, most of the Big Six banks have taken restructuring charges related to layoffs and branch closings. These charges have totalled about $2-billion in recent years, with many observers expecting additional charges ahead as the trend continues.
Laurentian said that it will “merge” 50 branches over the next 18 months, which suggests a large number of outright closings. In its most recent quarterly information, the bank employed more than 3,600 people full-time and operated a total of 148 branches.
The announced cuts represent more than 8 per cent of the bank’s full-time employees and the proposed bank mergers account for about a third of the bank’s total network.
Laurentian Bank is Canada’s eighth largest lender, with assets of more than $40-billion. It has the third-largest branch network in Quebec, behind Desjardins Group and National Bank of Canada.
During an investor day presentation at the start of the year, Laurentian executives outlined an ambitious strategy for the bank, which included doubling the size of its assets by 2022. But executives also outlined a plan to make the bank’s retail operations more efficient.
Although retail services generated 43 per cent of the bank’s revenue in fiscal 2015, they accounted for just 14 per cent of its adjusted profit – a figure that lags its bigger peers, who generate about 50 per cent of their profits from retail operations.
During the investor day presentation, executives said they will focus more on business banking and financial advice, and compete less at the branch level.
Its announcement on Wednesday appears to be putting this strategy to work.
“We want to be recognized for the expertise of our advisers and our account managers, for the ease of doing business with us as well as having a simplified product range complemented by automated transaction services,” Mr. Desjardins said in his statement.
He added: “We are confident in achieving our ambitious financial and growth targets while creating a more efficient and profitable bank for the benefit of our employees, customers and shareholders.”Report Typo/Error