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.
Separately, money management firms AIC Ltd, based in Burlington, Ontario, and Toronto-based Sentry Select Capital Corp laid off staff last week.
AIC spokeswoman Terri Oswald said the company let go 53 staff, or about 18 percent of its employees, but no portfolio managers were fired, she said.
Sentry Select Capital Corp reduced its 160-strong staff by 35 people last week, the Globe and Mail reported on the weekend.
Last June, when the credit crunch seemed contained to fixed income and specialized credit markets, Bank of Montreal reduced staff in some debt and financial product areas, as well as investment and corporate banking. At the time, news reports pegged the job losses at about 150 people, or 6 percent of BMO Capital Markets' staff.
Canadian Imperial Bank of Commerce cut 100 administrative and management jobs in its CIBC World Markets unit in late May, on top of earlier job losses when it shut down its European leveraged finance and structured credit businesses.
Reporting by Lynne Olver; Editing by Peter Galloway