By Nivedita Balu
(Reuters) -Bank of Nova Scotia on Wednesday announced plans to cut about 2,700 jobs globally – 3% of its workforce – and take a C$590 million ($430.94 million) charge in the fourth quarter, making it the latest Canadian bank to take cost-cutting steps in a challenging environment.
The layoffs appear to be the biggest among Canadian banks. Royal Bank of Canada and Bank of Montreal similarly have cut hundreds of jobs in response to rising costs in a high interest rate environment.
Scotiabank said the layoffs will result in a restructuring charge and severance provisions of about C$247 million. It also expects costs of C$63 million related to the consolidation and exit of certain real estate premises and service contracts, and impairment charges of C$280 million related to its investment in China’s Bank of Xi’an.
The layoffs are also a result of changes in customers’ day-to-day banking preferences and as bank looks to digitize and automate some processes, it said.
CEO Scott Thomson, who took charge in February, made a number of leadership changes in August ahead of a strategic overhaul that the bank is expected to launch at its investor day in December.
Scotiabank, which had about 91,000 full-time equivalent employees at the end of July 31, said its fourth-quarter results will see an impact of about 49 Canadian cents per share and a 10 basis points hit to its CET1 ratio.
It expects to see savings throughout fiscal 2024 and full run-rate benefits in fiscal 2025.
Analysts said the charge does not come as a surprise amid a review of is strategic direction.
“We interpret the writedowns as a cleanup of the balance sheet, and we view this positively,” RBC Capital Markets analyst Darko Mihelic said, noting it was a “small step in the right direction.”
Scotiabank is set to release its fourth-quarter results on Nov. 28.
($1 = 1.3653 Canadian dollars)
($1 = 1.3691 Canadian dollars)
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Niveidta Balu in Toronto; Editing by Will Dunham, Shilpi Majumdar and Jonathan Oatis)