RBC, AIC cut staff amid market downturn

Mon Oct 27, 2008 2:26pm EDT
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TORONTO (Reuters) - Fallout from plunging stock markets is beginning to emerge in Canada's financial services sector, as companies cut staff to reduce costs.

RBC Capital Markets, the investment banking unit of Royal Bank of Canada, laid off 20 investment bankers in Canada and the United States last week, a spokeswoman said on Monday.

They worked on the equity side of the business, RBC spokeswoman Katherine Gay said.

"It's entirely market-driven," she said.

All told, RBC has about 550 investment bankers in the two countries, primarily located in Toronto and New York.

While Canadian investment banks have not suffered the massive upheaval that has gripped the U.S. industry, players of all sizes are struggling with a dearth of underwriting and advisory activity due to the precipitous stock market drop of recent months.

As of Friday, the benchmark Toronto Stock Exchange composite index had tumbled 21 percent in October, and was down a further 3 percent at midday on Monday.

Financings and initial public offerings on the Toronto exchange have dried up. There were no IPOs on the senior Canadian bourse in the third quarter, according to consulting firm PricewaterhouseCoopers, and secondary equity financings were down about 67 percent in September, according to TSX data.

Independent investment bank GMP Capital said earlier this month that it laid off 37 staff, or about 8 percent of its total, but most came from support and administrative positions, it said. GMP also cut fixed salaries for certain senior executives by 10 percent.   Continued...