Scotiabank to cut 3% of global workforce

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The Bank of Nova Scotia says it’s cutting about three per cent of its global workforce because of changes to its operations and customers’ preferences, as well as ongoing efforts to streamline operations.

The reductions amount to about 2,700 jobs, based on the Canadian bank’s total staff of 91,013 employees as of July 31.

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The restructuring charge, severance provisions and a writedown on an investment in a Chinese bank will amount to a $590 million, or 49 cents a share, hit to earnings in the fourth quarter, the bank said in a statement on Oct. 18.

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The impact on its common equity tier 1 ratio will be about 10 basis points.

The restructuring charges also include the cost of exiting real estate and other contracts.

The bank announced impairment charges of $280 million, after taxes, related to the bank’s investment in Bank of Xi’an Co. Ltd., whose market value has remained below Scotiabank’s carrying value for a prolonged period, as well as impairment of certain intangible assets including software.

Royal Bank of Canada analyst Darko Mihelic said the charges should not come as a surprise following a review of Scotiabank’s strategic direction.

“The impact on capital is small and is not concerning at all to us,” Mihelic wrote in a note to clients.

He said the writedowns can be interpreted as a cleanup of the balance sheet and are viewed positively.