Primarily driven by branch closures and changes in the bank’s leadership structure, about two-thirds of the jobs cuts would be in Canada, while the rest are in international locations, and are expected to bring $120m in cost savings by 2015.
In Canada, the charges relate to recent efforts to automate several mid-office branch functions, and reductions in required wealth management operational support, whereas in international banking, the charges are primarily for closing or downsizing 120 branches.
The bank expects to record approximately $451m pre-tax, or $341m after tax in the 2014 fourth quarter earnings, which would reduce its diluted earnings by $0.28 cents per share, and lower its common equity Tier 1 capital ratio by 10 basis points.
Scotiabank president and chief executive officer Brian Porter said: "Today’s announcement is a result of making some difficult but necessary decisions to support our long-term goals.
"We are confident that these initiatives will allow us to continue investing in high-growth areas of the Bank.
"Notwithstanding these unusual charges, we remain confident that our 2014 reported results will be within our financial objectives for the full year."
The Toronto-based lender expects to take a charge to income of $47m in the wake of its adoption of a revised exchange rate used to translate unremitted dividends and the carrying value of its 26.6% interest in Banco del Caribe in Venezuela.
The bank is also changing a policy to accelerate write-offs of bankrupt consumer accounts in Canada, which is expected to result in a one-time charge of approximately $62m.
A legal charge of $55m related to certain ongoing legal claims in multiple business lines is also expected, apart from additional loan loss provisions of $109m, mostly because of three hospitality loans.
Image: Scotiabank plans to cut 1,500 jobs to reduce structural costs and improve operational efficiency. Photo: Verne Equinox.
