Scotiabank (TSX:BNS) announced on Wednesday a broad restructuring plan that will result in the dismissal of 3% of its workforce, approximately 2,700 jobs. The move will lead to a C$590 million ($432 million) charge to earnings in its fiscal fourth quarter. The bank's common equity tier 1 ratio is expected to be impacted by about 10 basis points due to these changes.
The restructuring plan includes a range of measures such as "end-to-end digitization", centralizing its international unit operating in Latin American economies, and the cost of exiting real estate and other contracts. This strategy is driven by new CEO Scott Thomson's mantra of “better, faster and at a lower cost.”
Thomson, who was previously CEO of Finning International Inc . (TSX:FTT), is expected to present an updated strategy at Scotiabank's Investor Day on Dec. 13.
In addition to the job cuts and charges related to the restructuring, Scotiabank will also take impairment charges of C$280 million after taxes for its 18% investment in Bank of Xi’an Co., as well as impairment of intangible assets including software.
Following the announcement, the bank's shares dropped by 1%. The scale of job cuts is larger than those recently announced by competitors such as Royal Bank of Canada (TSX:RY) (RBC) and Bank of Montreal (TSX:BMO). This move comes two months after RBC announced it would cut 2% of its staff.
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