Bank of Nova Scotia will take an after-tax charge of about $275-million when it reports its second-quarter financial results later this month, in a move that suggests the lender is moving quickly to slash payroll.
In a release, Scotiabank said that the restructuring charge was part of its "strategic efforts to enhance customer experience, drive a digital transformation and improve its productivity."
But as The Globe and Mail reported last month, these strategic efforts also entail significant job cuts across the bank, including a 7-per-cent reduction in the number of brokers at ScotiaMcLeod, its wealth management arm.
Scotiabank is not alone in cutting jobs. Most of the Big Six have made cuts in recent years as they react to slowing revenue growth and a dramatic shift in consumer behaviour, as customers increasingly bank online.
The slowing revenue growth stems from weak Canadian economic activity, low interest rates and a decreasing pace of loan growth, forcing banks to cut their expenses. The shift in consumer behaviour comes as the banks gear up for rising competition from savvy financial technology – or fintech – firms, pushing banks to invest huge amounts of money to increase their own technology talent pool and develop innovative online services, while making deep cuts in more traditional banking.
"We have written in the past about the digitization of banking and the evolving role of the branch network. 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 at CIBC World Markets, wrote in a note. "This time, it is Scotiabank's turn."
In 2015, Toronto-Dominion Bank cut nearly 1,600 positions, representing 1.9 per cent of its work force, and booked a charge of $686-million, the biggest among its peers. For all of 2015, the big banks recorded restructuring charges of more than $1.2-billion, the biggest one-year total for the Big Six going back at least a decade.
The banks report their second-quarter results starting May 25. Scotiabank will report its results on May 31.