Cuts come across firm's wealth and asset management arms
Manulife Investment Management today announced it has cut 250 jobs globally. The layoffs are limited to its officed in the US, Canada, the UK and Asia. According to a report by Yahoo!Finance the cuts represent around 2.5% of Manulife Investment Management’s total staff.
Bloomberg reports that these job cuts follow a boost in Q3 earnings for Manulife, having grown its business significantly in Asia. In its most recent reporting Manulife said core earnings grew by 28% to $1.74 billion, which exceeded estimates.
In a memo to employees first reported by Ignites, Manulife Investment Management CEO Paul Lorentz said the following: “Like every other asset manager, we are weathering sustained market volatility and, for the first time in 15 years, a market cycle of higher-for-longer interest rates.”
The cuts at Manulife follow a number of significant cutbacks by other Canadian financial firms. In October Desjardins cut around 400 jobs, citing a difficult economic environment and a failure to recoup benefits from significant past investments.
Also in October Scotiabank announced 2,700 layoffs, around 3% of the bank’s global workforce. They also citied a difficult economic environment as well as poor performance on capital markets and slower loan growth.
In August RBC announced it had laid off over 600 people, and was planning to cut 2% of their full-time equivalent staff in order to reduce costs.
In the wake of those layoffs, Robert Wessell, Managing Partner at Hamilton ETFs, told WP that layoffs in Q4 of 2023 may set Canadian financial firms up for stronger performance in 2024. He argued that in difficult years Q4 is seen as a “clean up quarter” by many banks and financial institutions, pulling forward some restructuring charges so they can begin the new year with reduced forward run-rate expenses.
“We predicted [this behaviour] in a note we wrote about the sector last month,” Wessel says. “Write-downs and restructuring charges – including severance – pulls forward expenses into Q4, and lowers run-rate expenses in future periods, primarily compensation. This also provides a favourable comparison in future years and increases EPS growth. Basically the banks are trying to clear the decks for next year.”