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NBC restructuring sees 600 jobs disappear and the creation of 500 knowledge-economy posts

27 October 2016  |  6832 views  |  0 Source: National Bank of Canada

National Bank of Canada ("National Bank") today announced that it expects to take a charge in its fiscal 2016 fourth quarter earnings relating to certain restructuring initiatives and write-offs of intangible assets totalling approximately $175 million, or $128 million after tax ($0.38 per share).

National Bank is pursuing the restructuring initiatives it began last year in order to accelerate its transformation plan, meet the changing needs of its clients and achieve greater operating efficiency. The restructuring charge includes employee severance payments and premises optimization. National Bank expects to realize approximately $120 million in annual pre-tax recurring savings.

These charges will reduce the Common Equity Tier 1 capital ratio (CET1 under Basel III) by 14 basis points. National Bank estimates that its CET1 ratio will be approximately 10.0% as at October 31, 2016.

"The shift to a digital economy offers tangible growth opportunities for National Bank, but requires us to remain agile and efficient in fully meeting client expectations. Our clients' habits are changing, and our services need to change with them. The measures currently being announced will affect a number of employees. The Bank will make every effort to reduce the impact by offering a targeted retirement program under specific conditions, reassignment and career transition programs and severance packages consistent with market best practices," stated Louis Vachon, President and Chief Executive Officer of National Bank.

As a result of these measures, just over 600 employee departures are expected, after taking into account proactive reassignment and retirement programs to be implemented over a minimum of 12 months that will affect close to 300 employees. At the same time, the organization is looking to fill over 500 positions to meet its ongoing recruitment needs, especially in sales and service and IT functions. The Bank therefore expects to increase the proportion of its employees in knowledge-intensive sectors over the coming years.

National Bank of Canada will disclose its results for Q4 2016 on December 2, 2016 around 6:30 a.m.

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