Bank of Montreal Prepares to Axe 5% of its Workforce

The fourth quarter profits for the Bank of Montreal slumped to $1.19 billion, following a hit by a restructuring charge, associated to severance, which will impact around 5 per cent of its total workforce.  According to the bank, the quarter ending on the 31st of October, included a restructuring charge worth $357 million, owing to a decision to increase the speed of implementing digitization initiatives, and other measures of simplification of the business.

The decision was also partially carried out owing to falling margins from its commercial and personal banking operations within the United States, owing to reduced rates of interest, in addition to sluggish economic growth for the United States estimated for the following year.

However, the Bank of Montreal did not disclose details about the expected job cuts. The bank currently has more than 45,000 employees, which means that the cuts are expected to impact more than 2200 positions in the organization. According to a geographic breakdown of the business these jobs will include around 775 from the United States and 1500 from Canada.

Bank Anticipates Major Savings with Changes

Tom Flynn, the Chief Financial Officer for the Bank of Montreal stated that the initiatives would give the business savings worth $200 million for the fiscal year of 2020 and around $375 million by the first quarter of 2021. He said: “I would expect the savings that we’ve talked about to flow through each of our businesses in a fairly representative way, both by operating group and by geography.”

Darryl White, the Chief Executive spoke about optimism by the bank and how it was reflected in the organizations strategy to improve on management discipline saying: “We’re looking for people to invest in areas where we have opportunities for growth and slowdown in areas where we don’t. In Canada, we expect macroeconomic conditions to remain constructive in 2020, improving modestly from 2019 with stable interest rates and unemployment running at a four decade low of 5.6 per cent. In the U.S., we expect economic activity to slow modestly in 2020 in response to trade protectionism.”