article-aa

Canada’s fifth-largest bank is facing pressure from investors to cut costs, as it grapples with an underperforming retail division and mounting expenses, according to sources who spoke to The Globe and Mail. Christina Kramer, head of personal and small-business banking, is expected to replace Kevin Patterson as head of technology and operations; Patterson plans to retire this year. Laura Dottori-Attanasio, current chief risk officer, will reportedly replace Kramer. (The Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The cuts—if the board approves them—will follow mass layoffs at BMO, which, in December 2019, announced 2,300 employees would lose their jobs in what amounted to the deepest cuts any Canadian bank had experienced in over 15 years. The financial institutions are the latest to join a global trend of banks shedding revenues and employees. HSBC said this week it would cut 35,000 jobs and US$4.5 billion in spending by 2022. European and U.S. banks cut 30,000 people in summer 2019, after revenues at 12 of the top banks in those markets dropped 11 per cent in the first half of that year. RBC, which reported first-quarter earnings on Friday, appears to be bucking the trend: it announced an 11 per cent rise in quarterly profit, driven largely by 35 per cent growth in its capital markets division compared to the same quarter last year and a seven per cent jump in retail banking.

article-aa

CEO Victor Dodig sent a memo to staff Thursday warning of an undisclosed number of job cuts in the coming months. (The Globe and Mail)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: CIBC cited a desire to improve its efficiency ratio, a measure of expenses relative to revenue, for the cuts. The bank had wanted to hit 55 per cent by the start of this year, but fell short, at 55.6 per cent. CIBC is the fourth major Canadian bank to report layoffs recently. Last year, BMO cut five per cent of its workforce and took a $484-million pre-tax restructuring charge. RBC and TD Bank took restructuring charges of US$83 million and $154 million, respectively, in their most recent quarters. Earlier this month, BMO and RBC said they weren’t planning more cuts this year, but CIBC and TD Bank did not rule out further restructuring charges. The Canadian layoffs follow significant cuts at global banks, which exceeded 75,000 staff.

article-aa

TD reported $2.86 billion in net income for the fourth quarter, down about four per cent from last year. CIBC earned $1.19 billion, a six per cent drop. (The Logic)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: The big banks are facing a series of macroeconomic challenges, including a growing number of potentially sour loans—something both CIBC and TD cited as partially responsible for their income dips. Banks are looking at cutting costs in response. TD reported a $154-million restructuring charge Thursday; earlier this week, RBC said it spent $113 million on severance and BMO reported a $484-million charge as part of a five per cent staff cut. CIBC did not report a restructuring charge Thursday, but CEO Victor Dodig said the bank is looking at improving efficiencies and simplify operations, which “could potentially require a charge down the line in order to accelerate our progress.”

article-aa

The bank’s profit rose 2.1 per cent overall to $1.4 billion, and it raised quarterly dividends to $1.44 per share. Its strongest divisional performer was its U.S. operations, where profit jumped 6.2 per cent to $172 million. Share earnings also grew to $3.10 per share, beating analyst expectations by four cents. These results helped counter a 13 per cent decline in capital markets. (The Logic)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: CIBC CEO Victor Dodig told investors in May that he expected earnings per share to be relatively flat this year, citing a slowdown in domestic mortgages, which dampened second-quarter results. But the bank has been pushing into the U.S. to reduce its dependence on domestic lending, including a $US5-billion acquisition of Chicago-based PrivateBancorp in 2017. These results—in which the U.S. commercial and wealth-management division was the quarter’s strongest performer—show the push is paying off. Quarterly profits in 2018 for that division saw significant growth following the acquisition—including a 431 per cent jump in the second quarter of 2018, relative to the same period in 2017. The bank’s overseas commercial banking is also helping CIBC weather uncertain market conditions amid global trade tensions, a factor RBC cited when it posted a 6.4 per cent capital markets decline Wednesday.

article-aa

CIBC’s exchange-traded funds (ETF) begin selling on the Toronto Stock Exchange today. Scotiabank started offering its own ETFs last year while the National Bank of Canada filed with regulators last year for its own funds. RBC recently partnered with BlackRock, the world’s largest ETF provider, to bring a combined $60 billion in assets under management. (Bloomberg)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: Canada’s banks have been late to the ETF space compared to the U.S. They’ve been leaving money on the table—Canadian ETFs saw $20 billion of inflows last year lifting assets in the industry to $156.6 billion and outselling mutual funds for the first time since 2009, the Financial Post reports. The banks are following the lead of fintech startups: Coinsquare launched two ETFs last year, and Wealthsimple offers access to third-party ETFs within its portfolios.

article-aa

The two major banks are joined by wholesale bank Concentra in loaning $80 million to the joint venture part-owned by Canopy Rivers Inc., the venture investment arm of Canopy Growth Corp. The funds will let PharmaHouse purchase a 1.3-million-square-foot glass greenhouse growing facility in Leamington, Ont. (Financial Post)

Read this article for free

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: This is the second time both BMO and CIBC have backed a cannabis company. BMO co-led financing in Canopy’s $175 million raise last January, and CIBC led Canopy Rivers’ $104-million funding round in June 2018. Despite legalization, traditional banks are wary of financing cannabis companies. Canopy—both Rivers and Growth—can perhaps thank its ties with the banks for earning the institutions’ trust: Bruce Linton, CEO of Canopy Growth and its VC branch, said, “The entire team at Canopy Rivers has great pedigree. They come from CIBC, TD, OMERS, and so it wasn’t difficult for us to convince the big banks that we have something great going at PharmHouse.”

article-aa

There will be some cuts to Canadian staff, but the bank was unable to say if they would result in net losses. “Canada is one of the countries that has been identified as performing well,” said Sharon Wilks, HSBC Canada head of media relations. “There will be cuts in some areas even as we will be hiring in areas that represent growth opportunities.” The bank is cutting US$100 billion in assets over the next three years as it reduces its U.S. and European footprint and focuses on Asia and the Middle East. (The Logic)

Purchase a subscription to read the full article.

By entering your e-mail you consent to receiving commercial electronic messages from The Logic Inc. containing news, updates, offers or promotions about The Logic Inc.’s products and services. You can withdraw your consent at anytime. Please refer to our privacy policy or contact us for more details.

Already a subscriber?

Talking point: While the bank as a whole is struggling, HSBC’s Canadian operations are doing well. In 2018, HSBC Canada announced it was opening more branches, and HSBC highlighted Canada as a “strong performing franchise” in its 2019 annual financial results, emphasizing that its return on tangible equity in the country hit 12 per cent. By comparison, HSBC’s global net profit dropped 53 per cent in 2019. HSBC plans to combine its private-banking unit with retail and wealth management globally, but only the latter division operates in Canada. The bank has increasingly challenged the Big Six for market share. Last week, The Logic reported HSBC wants the federal government to require banks to share information with fintechs, even as other large banks urged caution. RBC, BMO and CIBC have all reported cuts in recent months.