Scotiabank is the latest bank to slash jobs during a time of healthy profits.
CBC News has learned that the company will be eliminating back office support staff jobs across the country. The positions typically involve paperwork for everything from commercial loans to account operations.
The cuts will come over the next two years as Scotiabank closes regional operations and consolidates the services into two high-tech hubs in Toronto.
The streamlining is part of an investment in new technologies that will help "reduce duplication, shorten turnaround times and minimize risk" for a better customer experience, said spokeswoman Sheena Findlay in an email to CBC News.
Scotiabank employs more than 87,000 people worldwide. Findlay would not say how many positions will be eliminated. A bank employee told CBC News that she estimates about 200 people will be affected in her region alone.
The worker said she and her colleagues attended a meeting last night where Scotiabank announced the news.
"The initial reaction was a bombshell. Most people were shocked and some people were obviously devastated," said the employee.
Scotiabank reported a profit of $1.85 billion in the last quarter. The company joins other big Canadian banks that are reporting steady profit growth but still looking for ways to restructure and slash jobs amid changing technologies and a stagnant economy.
TD drops the axe
Toronto-Dominion Bank is also cutting jobs. The layoffs began earlier this year as part of an organizational review to streamline costs, even as TD continues to reap big profits. It earned almost $2.3 billion in the last quarter.
"A lot of people were pretty tense," said a TD employee about the atmosphere at his workplace when he lost his job just days ago.
"I had heard earlier [the] day I was notified that it was going to be a big day, that a lot of people were going to be notified," he said.
The ex-employee speculated that hundreds of jobs may be on the chopping block. "An awful lot of people I know in the credit card space are gone, and I know they've made some significant changes in the back office. I'm not sure any business system is spared," he said.
"I have heard that morale has not been good over the past few months," another recently laid-off TD employee told CBC News. He said the bank's hiring of an outside company, Boston Consulting Group, to help pare costs has not helped to foster goodwill.
"General view is that TD isn't the place it used to be, culturally," he stated.
TD has more than 85,000 employees. The bank refused to say how many jobs are affected, because it says the process isn't finished.
Spokeswoman Ali Duncan Martin told CBC News in an email that the bank began "an organizational review" early this year, starting with its U.S. operations. TD is now restructuring its Canadian business, focusing "on clearly defining our executive and corporate management structure," she said.
The bank's hard-nosed cost-cutting mission has been no secret. During its last quarterly report, TD Bank Group CEO Bharat Masrani referred to the company's "restructuring change." He also pointed to threats on the horizon, such as a slow economy, low oil prices, and low interest rates, which hurt the bank's bottom line.
But, he added, with "a resilient business model, I'm confident we are well positioned to weather the storm."
Earlier this month, National Bank of Canada also announced job cuts. Canada's sixth biggest bank said it was eliminating "a few hundred employees" as part of a restructuring plan to address a slow-growth economy and new technologies.
National's profits grew three per cent to $453 million in the third quarter.
Finance expert Laurence Booth said banks have a responsibility to their shareholders to remain profitable even during tough economic times. "They have a duty to be as efficient as possible," said the University of Toronto finance professor.
Booth also pointed out that technological changes such as internet and mobile banking are forcing banks to rethink their business model and the number of branches that remain open for business.
He added that it's in all Canadians' interest to have competitive big banks that earn big profits. "The last thing we'd want is featherbedding in the banking system and to see the banks lose business to internet banking in the U.S. or foreign-based subsidiaries in Canada," he said.