TORONTO (Reuters) - There are more investment and corporate banking layoffs to come at Canadian bank-owned dealers and boutique firms, a recruiter predicted on Friday, as credit markets in particular suffer from lackluster demand.
“I don’t think we’re done,” said Bill Vlaad, a Toronto-based recruiter who specializes in the financial services sector.
A newspaper reported on Friday that Bank of Montreal (BMO.TO) is laying off about 150 people in its capital markets unit, or roughly 6 percent of staff.
Bank of Montreal spokesman Ralph Marranca would not confirm those numbers, but said there have been reductions in some debt and financial products, as well as in investment and corporate banking.
It’s normal to cut back in businesses where market conditions are soft, but the capital markets unit is investing in other areas, Marranca said, citing its U.S. municipal bond business as an example.
In late May, CIBC World Markets said it cut 100 administrative and management jobs, on top of earlier cuts when it shut down its European leveraged finance and structured credit businesses.
The credit crunch has taken the heaviest toll on CIBC World Markets, owned by Canadian Imperial Bank of Commerce (CM.TO). Its pre-tax writedowns for various asset-backed securities and credit protection have amounted to almost C$6 billion in the past two quarters.
Canadian financial markets may be less volatile than those in the United States, but they are by no means insulated, Vlaad said.
He expects some of the other big banks to reduce corporate and investment banking staff, and said other firms have done small reductions already.
“There’s been some slight bloodletting at a lot of these shops that you’re not aware of; (they‘re) hoping that the majority of the details can get done behind the scenes,” Vlaad said, noting the fixed-income area has been dented the most.
Weak demand for new debt is a big factor, he said, describing the debt-heavy private-equity buyout of telecoms company BCE Inc (BCE.TO) as a good example.
“In the normal course it would be, ‘well it’s a big deal and it’s going to be tough to swallow,’ but now, you just can’t get debt deals done,” Vlaad said. “There are so few interested buyers in the product, you can’t have the same number of support or professionals in the industry when the deals aren’t getting done.”
Former employees of one financial firm who lost their jobs to the credit crunch have apparently landed on their feet.
Structured finance firm Coventree Inc COF.TO, which is planning to shut down operations, had to lay off 50 of its 80 staff members after the Canadian non-bank asset-backed commercial paper market froze up last summer. The market seizure and subsequent lack of interest in non-bank-sponsored ABCP put and end to Coventree’s securitization business, but executives said that laid-off employees have had no trouble putting their experience to good use.
“I’d say 90 percent, 95 percent of them have ended up somewhere, and a significant chunk of them have ended up in jobs better than they had at our place,” Coventree Chairman Brendan Calder told reporters on Wednesday.
Reporting by Lynne Olver; editing by Rob Wilson