Canadian Banks, Ranked World's Best, Step Up Job Cuts as Profits Drop

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Canadian Banks, World’s Best, Step Up Job Cuts as Profits Drop
By Doug Alexander and Sean B. Pasternak


June 10 (Bloomberg) -- Canada’s biggest banks, ranked tops in the world last year by the World Economic Forum, cut almost 4,000 jobs last quarter after soaring loan losses led to a sixth straight profit decline.

Royal Bank of Canada, Bank of Nova Scotia and Bank of Montreal made reductions that swept away managers, mortgage sellers and senior executives as banks made their first round of cuts since the financial crisis began in 2007. The lost jobs equal as much as 3 percent of the banks’ workforce, according to company filings.

Staying profitable wasn’t enough to immunize Canadian banks from the global credit crunch, which triggered more than $1 trillion in losses and writedowns worldwide and cost more than 300,000 people their jobs, data compiled by Bloomberg show. Canadian lenders are trying to halt a slide in profit as rising defaults in the most recent quarter forced them to more than double the amount set aside to cover bad loans to C$2.93 billion ($2.65 billion).

“We are managing costs very carefully,” Royal Bank’s Canadian banking head David McKay said in a May 29 call with analysts. “We’re looking at performance management and attrition and managing down our employee base, and we’ll continue that.”

Companies in the finance, insurance and real estate industries cut a combined 9,200 jobs last month as the country’s unemployment rate rose to an 11-year high, Statistics Canada reported on June 5.

The banks made no specific references to job cuts in their earnings releases last month. A tally of the headcounts at the end of April compared with Jan. 31 showed that Royal Bank, the country’s biggest lender, cut 1,109 jobs in Canada during the fiscal second quarter, or 1.5 percent of total staff. ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=aDdWm59o6UGg