BMO vows ‘accountability’ upgrade

TORONTO The chief executive of the Bank of Montreal vowed Tuesday that there will be “ongoing accountability” on costs at the bank after it was forced to take yet another restructuring charge in connection with job cuts.

BMO reported on Tuesday net income of nearly $1.2 billion for the three months ended Oct. 31, down from about $1.7 billion a year earlier, due in part to a $484-million pretax restructuring charge for its fiscal fourth quarter.

The charge was tied to severance and some small real estate-related costs, which BMO said were in part linked to “key bank-wide initiatives focused on digitization, organizational redesign and simplification of the way we do business.”

BMO CEO Darryl White told analysts during a conference call that the decision was made “with serious consideration,” and was in line with its strategy.

“All areas of the bank contributed to the charge, and there will be ongoing accountability throughout the organization for the decisions that have been made,” White said.

BMO’S chief financial officer, Tom Flynn said the restructuring charge would affect around five per cent of the bank’s employees.

He added that the bank expects the measures to create savings of approximately $200 million in fiscal 2020 and to find run-rate savings of about $375 million by the first quarter of fiscal 2021.

The comments came after the Toronto-based lender also reported it had cut the number of full-time equivalent employees by 810 from the previous quarter, to 45,513 total for the period ending Oct. 31.

However, the restructuring costs have been a recurring theme for BMO, which has posted five such charges in the past four years, totalling around $800 million after taxes, noted National Bank Financial analyst Gabriel Dechaine.

Most recently, the bank posted a $90-million after-tax severance expense in the second quarter, attributed to the bank’s capital-markets unit.

“The divergence from other banks (i.e., relatively quiet since 2015/2016) raises concerns that BMO has structural cost issues, which is a reasonable conclusion,” Dechaine wrote in a report.

White, though, suggested that the restructuring costs could be coming to an end (something Dechaine noted).