Scotiabank cutting 3% of global workforce, will take $590M Q4 charge after tax

Scotiabank is cutting about three per cent of its global workforce as a result of changes at the bank and customers’ day-to-day banking preferences, as well as ongoing efforts to streamline operations, the bank announced Wednesday.

It will also take several charges that total $590 million after-tax, or about 49 cents per share, for its fourth quarter related to the cuts and other changes it is making.

The charges include $247 million after-tax for restructuring and severance provisions and $63 million after-tax related to the consolidation and exit of certain real estate premises and service contracts.

They also include an impairment charge of $280 million after-tax related to its investment in Bank of Xi’an Co. Ltd. as well as the impairment of certain intangible assets including software.

Scotiabank noted that the market value of Bank of Xi’an has remained below the bank’s carrying value for a prolonged period.

“We expect the savings on the above items to be achieved throughout fiscal 2024 and anticipate full run-rate benefits in fiscal 2025,” the bank said in a statement.

Scotiabank said it will provide further details when it releases its fourth-quarter results on Nov. 28.

The bank had 91,013 employees in its third quarter.

Canada’s big banks have been working to manage costs given the continued economic uncertainty ahead after an unprecedented interest rate cycle.

Higher interest rates and inflation have put pressure on Canadian households.

When it reported its third-quarter results earlier this year, Royal Bank of Canada said it was working to cut its employee numbers after it said it had over-hired by thousands.

RBC said in August that it had already cut about one per cent of staff and it expected to cut another one to two per cent this year.

CIBC also reported in August that it had 48,718 employees in its third quarter, down 1,709 from the fourth quarter of 2022.