National Bank Announces a Restructuring Charge and Write-offs of Intangible Assets in Q4 2016
National Bank of Canada ("National Bank") today announced that it expects to take a charge in its fiscal 2016 fourth quarter earnings relating to certain restructuring initiatives and write-offs of intangible assets totalling approximately $175 million, or $128 million after tax ($0.38 per share).
National Bank is pursuing the restructuring initiatives it began last year in order to accelerate its transformation plan, meet the changing needs of its clients and achieve greater operating efficiency. The restructuring charge includes employee severance payments and premises optimization. National Bank expects to realize approximately $120 million in annual pre-tax recurring savings.
These charges will reduce the Common Equity Tier 1 capital ratio (CET1 under Basel III) by 14 basis points. National Bank estimates that its CET1 ratio will be approximately 10.0% as at October 31, 2016.
"The shift to a digital economy offers tangible growth opportunities for National Bank, but requires us to remain agile and efficient in fully meeting client expectations. Our clients' habits are changing, and our services need to change with them. The measures currently being announced will affect a number of employees. The Bank will make every effort to reduce the impact by offering a targeted retirement program under specific conditions, reassignment and career transition programs and severance packages consistent with market best practices," stated Louis Vachon, President and Chief Executive Officer of National Bank.
As a result of these measures, just over 600 employee departures are expected, after taking into account proactive reassignment and retirement programs to be implemented over a minimum of 12 months that will affect close to 300 employees. At the same time, the organization is looking to fill over 500 positions to meet its ongoing recruitment needs, especially in sales and service and IT functions. The Bank therefore expects to increase the proportion of its employees in knowledge-intensive sectors over the coming years.
National Bank of Canada will disclose its results for Q4 2016 on December 2, 2016 around 6:30 a.m.
Caution Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These forward-looking statements include, without limitation, guidance relating to the financial impact of the restructuring charges including the Bank’s ability to improve efficiency and realize expected costs savings, and the expected capital level of the Bank. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Bank. The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2015 Annual Report. Investors and others who rely on the Bank’s forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf. The forward-looking information contained in this press release is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.
About National Bank of Canada
With $230 billion in assets as at July 31, 2016, National Bank of Canada, together with its subsidiaries, forms one of Canada’s leading integrated financial groups. The Bank has close to 22,000 employees and is widely recognized as a top employer. The Bank's securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank’s activities at nbc.ca or via social media such as Facebook, LinkedIn and Twitter.
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National Bank of Canada
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National Bank of Canada