RBC trims 450 jobs, shifts its strategy to new investments

Digital, data, technology named as key areas of focus tied to restructurings

Royal Bank of Canada said Wednesday it is cutting 450 jobs, primarily from its head office locations in the Greater Toronto Area, as it tries to revamp its business in light of shifting client preferences.

“As always, we consolidate where necessary so that we can reinvest in key areas including digital, data, new technology, as well as investment in high-growth business areas,” spokeswoman Catherine Hudon said in an email.

The bank said it is also making hundreds of other changes including promotions, transfers and the creation of new roles and teams.

RBC said it will provide support to those affected by the changes, including career transition services and continued salary and benefits for a period of time.

RBC stock closed Wednesday at $93.28, down 0.48. Last month, RBC reported an 11-per-cent increase in second quarter earnings, beating market forecasts, helped by a strong performance in its capital markets and wealth management businesses.

Canadian banks have been shaving costs in recent years as they strive to grow their earnings amid slowing loan growth at home. They have also been investing more heavily in technology in order to suit the needs of their clients, particularly younger, tech-savvy customers who wish to do more of their banking online rather than at bricks-and-mortar branches.

The big banks have announced more than 5,000 job cuts tied to restructurings during the past three years, though the number is probably higher since many announcements, including those by Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, didn’t disclose job figures. The country’s six largest lenders collectively employed about 363,600 workers as of the end of April, including 75,281 at Royal Bank, according to company disclosures.

Edward Jones analyst Jim Shanahan said that, as a group, the Canadian banks have taken about $3-billion worth of restructuring charges over the past five years. The bulk of those restructuring charges has been earmarked for employee severance and investments in digital technology, Shanahan said.

“They’re replacing people with systems and processes that are driven by technology to reduce their costs,” Shananan said.

But there has been no dramatic reduction in bank branches during that time, Shanahan added.

“It would seem to me that there’s some opportunity for the banks to get quite a bit more aggressive, actually,” he said.

The changes have not just hit the big banks. Great-West Lifeco Inc., the nation’s second-largest life insurer, said in April that it’s slashing 13 per cent of its workforce in the country, or 1,500 jobs after profit slumped.