Bank of Nova Scotia takes $375-million pre-tax restructuring charge as it reorganizes for digital age

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Bank of Nova Scotia is taking a $375-million pre-tax restructuring charge in the second quarter.

Bank of Nova Scotia is taking a $375-million pretax restructuring charge in the second quarter as Canada’s third-largest bank continues efforts to digitize processes and enhance productivity.

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As customers seek more ways to bank online and through mobile devices, and new fintech rivals enter the market in business lines such as loans and payments, traditional banks are being forced to invest in technology and reorganize their branch networks.

“The natural offshoot of those trends is the need to restructure the existing business, which makes the restructuring charge an all too regular feature of earnings season,” Rob Sedran, an analyst at CIBC World Markets Inc., wrote in a note to clients Monday morning.

“This time, it is Scotiabank’s turn,” Sedran said.

The impact of the second quarter restructuring charge, which will amount to 22¢ per share ($275 million after tax), is mostly likely to be felt in the Canadian banking business, Sedran said.

Scotia took a similar charge – amounting to $148-million pre-tax – in the fourth quarter of fiscal 2014.

In a brief statement Monday morning, the bank said it would provide more details about the latest charge when it releases financial results for the second quarter on May 31.

Over the past several months, Scotia has been cutting positions in some areas of the bank while hiring in others, particularly in areas that require digital expertise. Officials have been reluctant to disclose the number of positions eliminated, with the latest round of cuts understood to have affected as many as 60 brokers in Scotia’s wealth management division.

“We are making some changes to better align all of our wealth management services and operate more efficiently in each of our markets,” Scotiabank spokesperson Heather Armstrong said in an email.  

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The bank has previously disclosed a plan to create a single digital platform to bring together wealth management services such as investment advice and estate planning in Canada.

Armstrong declined to comment on the number of employees affected.

“We are working with our advisers through these changes and out of respect to them we are unable to give you a sense of the specifics at this time,” she said.

In addition to changes in personnel, Scotia has been making significant investments in technology, including $100 million spent to make upgrades across the Canadian retail network.

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