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 (TSX:RY) and Bank of Montreal (TSX:BMO) similarly have cut hundreds of jobs in response to rising costs in a high interest rate environment.
Scotiabank (TSX:BNS) 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)