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iA Financial Corp Inc., better known as Industrial Alliance, is restructuring its capital markets division and laying off staff, extending the recent run of job losses on Bay Street.

As part of the changes, the insurer has laid off 17 capital markets employees, particularly in investment banking. iA said more than 30 employees will remain in the division, and they will continue to operate in areas such as bond trading and foreign exchange.

“Market conditions have been very challenging over the last two years with rising interest rates, limited new emissions on the primary market and challenging corporate deal flow volume,” spokesperson Pierre Picard said in an e-mail statement.

iA has a small capital markets division relative to the Big Six banks and to large independent dealers such as Canaccord Genuity Group Inc., but the cuts are another blow to Bay Street, which has already faced layoffs in recent months from companies that include Canaccord Genuity, BMO Nesbitt Burns and Laurentian Bank Securities.

Earlier this week, RBC Dominion Securities cut jobs, particularly in its fixed-income division, after the bank announced last month that it would lay off another 1 per cent to 2 per cent of its total staff.

Investment banks around the world are grappling with dramatically lower deal volume this year. Although U.S. stock markets have risen sharply in 2023, most stocks aren’t faring well; instead, strong returns from tech giants such as Apple Inc. and Alphabet Inc. have lifted the broad market.

Because many stocks have struggled or have had muted returns, companies have been reluctant to launch financings that drive investment banking fees.

In September, Bay Street has seen some glimmers of hope with successful financings from issuers such as Enbridge Inc., but stocks are now slumping again as investors come to grips with prolonged higher interest rates because inflation is still running too hot.

Investment banks are adjusting their head counts to adapt to the new market realities. In June, BMO started laying off 4 per cent of its capital markets positions globally – or more than 100 employees – with about half of those roles in Canada, and Canaccord Genuity laid off 7 per cent of its Canadian staff, amounting to roughly 75 people.

Around the same time, Laurentian Bank Securities cut 10 per cent of its staff and took a $6-million restructuring charge, citing “unfavourable financial market conditions.”

Based in Quebec City, iA has more than 9,000 employees and is best known for its insurance and wealth-management operations. The company is a top seller of segregated funds, with a third-place market share, and is also a dominant player in individual insurance.

iA reported an $817-million profit for 2022.

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