Canadian Imperial Bank of Commerce (TSX:CM) has become the latest Canadian bank to trim its head count as it looks for ways to improve efficiency at a time when all of the country’s top lenders face a slowdown in consumer borrowing.
A report in the Wall Street Journal Thursday said CIBC has cut more than 500 jobs over the past two weeks.
A bank spokesman said the cuts reflect CIBC’s efforts to realign its resources and the bank plans to hire an additional 5,000 staff over the course of the year.
CIBC currently has about 44,500 Canadian employees.
Back in November, Scotiabank (TSX:BNS) announced plans to cut 1,500 jobs worldwide, roughly two-thirds of them in Canada. Scotiabank said the Canadian job cuts were due to plans to centralize and automate several branch functions, among other things.
No Canadian branch closures were expected but Scotiabank did plan to reduce the number of locations outside the country by 10 per cent.
About the same time, Royal Bank (TSX:TRY) announced it was exiting its wealth management business in the Caribbean, following the sale of its Jamaican operations earlier in 2014.
RBC did not say how many jobs would be lost as a result of its sale of the Caribbean wealth management business, but noted that international wealth management teams in Toronto, Montreal and the U.S. would be affected.
Meanwhile, Barclays downgraded its stock ratings of three of Canada’s big five banks — Royal Bank (TSX:RY), TD Bank (TSX:TD) and Bank of Montreal (TSX:BMO) — along with Laurentian Bank (TSX:LB).
In downgrading them to underweight, Barclays cited concerns about how they’ll be affected by a slowdown in Canada’s economy as a result of the recent drop in global oil prices.
Analysts say the Bank of Canada’s surprise interest rate cut Jan. 21 to 0.75 per cent from one per cent has put pressure on the commercial banks’ lending margins, which will hamper earnings growth.
Canada’s biggest commercial lenders have only partially passed along the central bank’s rate cut, reducing their prime lending rates by only 15 basis points instead of the full 25.
James Shanahan, an analyst with Edward Jones, said the jobs eliminated at CIBC were most likely back office positions.
“Bank management teams will continue to look for opportunities to reduce operating expenses, particularly if interest rates decline further or if credit costs start to rise,” Shanahan said in an email.