Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, November 05, 2014

Scotiabank Job Cuts: 1,500 Global Positions, Two-Thirds In Canada, On Chopping Block

TORONTO - Widespread cost reductions at Scotiabank, which include plans to cut 1,500 jobs, could be a sign of changes to come in Canada's banking industry, several analysts suggest.

After sailing through years of global economic turbulence relatively unscathed, Scotiabank said Tuesday it will close 120 branches at its international banking arm as it takes a $341-million hit after taxes to its fourth-quarter earnings.

Scotiabank (TSX:BNS), which calls itself Canada's most international bank, expects to remain on track to meet its 2014 financial objectives.

The cost reductions have raised questions about whether other Canadian banks will make similar adjustments to their operations, as underperforming regions and slower overall growth put pressure on results.

"While some of the issues do appear to be specific to Scotia, the charges highlight ongoing concerns that the markets have towards the Canadian banks' operations and growth outlook," Barclays analyst John Aiken wrote in a note.

"We would expect that Scotia's announcement will cast a shadow on the other banks as investors attempt to extrapolate meaning towards its peers."

Most Canadian banks are as broadly exposed to fluctuations in the global economy, but several executives have talked about a renewed focus on lowering expenses as the growth in the domestic economy remains muted for the next several years.

In August, incoming TD Bank (TSX:TD) chief executive Bharat Masrani told investors he will be focused on ways to run the business more efficiently, while Royal Bank (TSX:RY) said it was prepared to deal with slower growth in some areas of its business.

"Usually these types of changes happen at the end of the fiscal year before the bonuses go out," said Gareth Watson, vice-president of investment management and research at Richardson GMP in an interview.

"The fact that it's happening now is not a shock at all."

Canada's biggest banks will begin to report their full-year financial results on Dec. 2, with Bank of Montreal (TSX:BMO) going first.

Of the Canadian lenders, Scotiabank was considered one of the safest bets during the economic downturn, largely because its international operations were outside the United States, where the housing crisis tore into the results of some of its Canadian peers.

Scotiabank took a more global approach, picking up smaller banks in places like Mexico and building its operations in Latin America and the Caribbean.

But over the past year, those assets have proven to be a weight on the bank. In its most recent quarterly report, profits at the bank's international division fell 16 per cent to $452 million from a year earlier.

Analysts said it was no surprise that Scotiabank zeroed in on those operations, with plans to close about 10 per cent of its branches outside of Canada, including in Mexico and the Caribbean.

Shares of Scotiabank closed $1.59 lower, down 2.3 per cent, to $67.19 on the Toronto Stock Exchange, pushing the TSX financial sector lower.

"The frustration for us, across the international footprint, is that we've had very solid asset growth over the past three or four years and not all of that has dropped to the bottom line," Scotiabank's president and chief executive officer Brian Porter told analysts on a conference call.

However, Porter, who has been Scotiabank's top executive since Rick Waugh retired last November after a decade in the role, said the bank continues to invest in its international business.

"We're putting a new core banking system in Mexico and we continue to invest in other channels like mobile banking," he said.

Outside of Scotiabank, other Canadian financial institutions have suffered when trying to expand globally, particularly in the Caribbean where Royal Bank recently sold its Jamaican division.

CIBC (TSX:CM), which it has maintained a presence in the Caribbean since the 1920s, has also faced trouble as the local economy remains in a slump.

Macquarie Securities analyst Jason Bilodeau outlined a number of elements he believes contributed to Scotiabank's decision, including difficult operating conditions, changing business practices and an effort to reduce costs across its operations.

"It is not a positive that the bank finds itself in the position to require these charges, but the transitory impact is manageable," wrote Bilodeau in a note.

"It looks like this is an effort to clean up a wide range of issues.

While no branch closures were announced in Canada, the bank said two-thirds of the jobs will be cut in Canada, some at its head office.

Scotiabank said it expects to reduce annual costs by $120 million through the measures, but the full benefits won't be seen until its 2016 financial year, which begins next November.

In addition to $148 million in restructuring charges, Scotiabank said it will take a number of other one-time items that will hit its bottom line including an additional $109 million of loan loss provisions related to the Caribbean region.

It will write down the value of its investment in a Venezuelan bank by $129 million and take a $47-million charge related to unremitted dividends from Banco del Caribe in Venezuela, due to a change in currency exchange rates.

Scotiabank said it will also take a $62-million charge related to an adjustment to its writeoff policy on unsecured bankrupt retail accounts in Canada and a $55-million charge related to ongoing legal claims.

The bank also said it expected a $30-million charge as a funding valuation adjustment related to uncollateralized derivative receivables.

Original Article
Source: huffingtonpost.ca/
Author: CP | By David Friend

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