Scotiabank to cut 1,500 jobs amid restructuring charges

Scotiabank will cut 1,500 jobs, including about 1,000 in Canada, as it reduceshead-office staff and eliminatessome of its international branches.

The bank said Tuesday it will take a total of $451 million in pre-tax charges in the fourth quarter.

The bank plans to centralize and automate some of its Canadian branch functions, and reduce some of its wealth-management operational support.

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Scotiabank will also closeor downsizeapproximately 120 branches in its international banking division.

Analysts said the move is probably the right one in the long run, but expected some weakness in the stock as a result of the dour job news on Tuesday.

"The charges come at a time when the Canadian banks have seen an almost wholesale changing of the guard at the top of the house," Barclays analyst John Aiken said in a note to investors. Many of Canada's big banks have changed CEOs in the past year, so a move to fire peopleearly in the tenure of the new CEO by Scotiabank could be a sign that others are planning similar moves.

"This is the close of his first fiscal year at the helm," Aiken said. "Investors may rightfully be concerned that Scotias announcement may signal a greater than usual house cleaning in the fourth quarter, in order to set the stage for the new class of CEOs."

The bank said it will book a restructuring provision of approximately $148 million inthe fourth quarter, mainly to cover employee severance costs.

The bank expects to save $120 million annually as a result of the restructuring, but the full benefits won't be seen until 2016.

As of the end of the bank's third quarter, it had almost 87,000 employees worldwide, includingmore than 36,700 in Canada.

CEO confident about reaching objectives

Scotiabank said it will also take a number of charges relatedto its investments in Venezuela and the Caribbean. A revised exchange ratemeansScotiabank will take charges and writedowns totalling $176 million on its26.6 per centinterest in Banco del Caribe in Venezuela.

The bank also expects to record a loan loss provision of approximately $109 million, primarily due to three impaired loans in the Caribbean region's hospitality portfolio.

The bank will also take a $62-million charge forunsecured bankrupt retail accountsin Canada, plus a $55- million charge for ongoing legal claims.

In total, the charges will cutbank's fourth-quarterdiluted earnings by 28 cents per share.

"We are confident that these initiatives will allow us to continue investing in high-growth areas of the bank," president and CEO Brian Porter said in a statement. "Notwithstanding these unusual charges, we remain confident that our 2014 reported results will be within our financial objectives for the full year."

Scotiabank made a record $6.7 billion in net profit in the fiscal year that concluded on Oct. 31, 2013.

The bank will announce its 2014 annual fiscal results on Dec. 5.