Canada’s Scotiabank announced in Toronto yesterday that it would close 35 of its over 200 branches in the Caribbean and that it would sever 1,500 full-time employees, including 500 in its international operations. In a news release, Scotiabank said it expected to record certain charges in its fiscal 2014 fourth quarter earnings, aggregating to a total of approximately $451 million pre-tax.
Of the Caribbean, Scotiabank said: “Due to the prolonged economic recovery and continued uncertain outlook, these additional amounts bring the net carrying value in line with the expected net recoverable value.” The bank said it had started restructuring initiatives “in order to improve the speed and quality of service it provides its customers, to reduce costs in a sustainable manner, and to achieve greater operational efficiencies.
“The bank intends to record a restructuring provision of approximately $148 million in the fourth quarter. The majority of the restructuring provision relates to employee severance charges in the bank’s Canadian banking and international banking divisions and will affect people at all levels of the organisation.”
The statement said “in international banking, the charges are primarily for closing or downsizing approximately 120 branches, which will allow us to focus on high-growth markets, minimise branch overlap, and realise synergies resulting from recent acquisitions.” In a conference call, Brian Porter, chief executive officer of Scotia, said of 120 branches to be closed across the bank’s network, 35 would be shuttered in Mexico and “about 35” in the Caribbean.
In response to a question from a Canadian banking analyst during the conference call, Porter said: “In some of these (Caribbean) countries, we are just overbranched and we have to size it to the economic realities of these economies.” Scotiabank operates in 21 countries in the region. Scotiabank T&T, which is owned 51 per cent by its Toronto-based parent, was contacted for comment about how the changes would impact on T&T, but did not respond up to press time.
The bank also wrote down the value of its unremitted dividends from a 27 per cent stake of a bank in Venezuela as it “adopted a revised exchange rate.” Scotiabank said it announce its year-end and fourth quarter results for fiscal 2014 on December 5.