Laurentian Bank will reduce its office space in half in downtown Montreal as part of its strategic plan that it will unveil on December 10.
The Montreal financial institution announced on Tuesday that it would reduce its office space in Montreal, Toronto and Burlington by 50%. The announcement does not relate to the branch network. Management anticipates a charge of $ 49 million related to this decision.
The decrease is 50% in each city, specifies Merick Séguin, senior director of media relations. In Montreal, the announcement only affects the head office in downtown Montreal.
The changes have not yet taken place, said Yvan Deschamps, chief financial officer, during a conference with analysts. “We will begin the process of subletting this space.”
Laurentian will prioritize work from home for tasks that allow it, said Rania Llewellyn, President and CEO. “This will be a major differential factor in attracting talent.”
The Bank also abolished 64 positions “at all levels” before the announcement. Of this number, 40% are in Quebec. It anticipates a charge of $ 9 million in this regard.
An expected restructuring plan
Laurentian Bank has been trying for several years to transform its activities. A first seven-year transformation plan was adopted in 2015. Starting in October 2020, Ms. Llewellyn has promised to present a new strategic plan.
In anticipation of the plan it will present on Dec. 10, Laurentian said it expects certain charges in the fourth quarter of fiscal 2021, which are expected to result in a reduction of $ 163 million in after-tax profit.
Before tax, the charge reached $ 209 million, which is higher than the total charges recorded since 2015, notes Mario Mendoca, of TD Securities, in a note.
Doug Young, of Desjardins Capital Markets, wonders if these charges are not another chapter “in a never-ending story”. The annual savings of $ 20 million expected from 2022 are modest compared to the magnitude of the charges announced, he said.
Ms Llewellyn, for her part, considers that the decisions taken by the bank were “difficult, but necessary”. “We are more confident than ever about our future.”
The charges are expected to reduce its adjusted profit by $ 14 million after tax. Diluted earnings per share reported is expected to be impacted by $ 3.73 and adjusted diluted earnings per share by 33 cents.
The leader gave few details on the elements that would be in the strategic plan. The bank, which will also publish its results on December 10, is in a silent period.
Laurentian has nevertheless announced that it will combine its two digital platforms into one, LBC Direct, from 2022. “LBC Digital customers do not need to take any measures for the moment,” assures Mr. Séguin in an email. All affected clients will receive timely communications, advice and support to ensure they can continue to receive the best possible products and services from Laurentian Bank. ”
At the close, Laurentian stock closed down $ 1.89, or 4.57%, at $ 39.44 on the Toronto Stock Exchange.