(Bloomberg) --Bank of Montreal's capital markets unit is cutting about 100 positions, or 3.5% of the division's staff, in response to a weak environment for deals.
About half of the jobs lost at BMO Capital Markets are roles in Canada, according to a person familiar with the matter, speaking on condition they not be identified. Executives were meeting with some staff to outline the details early Wednesday afternoon.
"We are focused on managing expenses dynamically, growing revenue and improving our relative efficiency ratio," Kelly Hechler, a spokesperson for the bank, said by email. "We are working closely with affected employees to provide support and to ensure they are treated with fairness and respect."
Globally, deal values have fallen more than 40% this year to $1.2 trillion, according to data compiled by Bloomberg. Canadian companies have announced only a handful of mergers or acquisitions worth $1 billion or more in 2023.
Equity deals are also slow — proceeds from all financings on the Toronto Stock Exchange were down 69% in the first five months of the year, to C$3.3 billion ($2.5 billion), compared with the same period last year, according to data from exchange operator TMX Group. Money raised in initial public offerings plunged 75%.
Canada's banks, like their Wall Street counterparts, hired aggressively during the strong markets of 2021 and early 2022. BMO Capital Markets ended April with 2,849 employees, about 400 more than it had two years earlier.
But revenue in the bank's global markets arm, which includes trading, was soft in the fiscal second quarter, contributing to a drop in BMO Capital Markets' earnings to C$380 million ($287 million). That was 24% below the previous quarter.
Bank of Montreal, Canada's third-largest lender, set aside a larger provision for loan losses in its most recent quarter — including a special provision on the loan portfolio of Bank of the West, which it bought from BNP Paribas for $16.3 billion in a deal that closed earlier this year.
Royal Bank of Canada has also said it's looking to cut expenses after a long hiring spree. "Honestly, we overshot — we overshot by thousands of people," Chief Executive Officer Dave McKay told analysts on a conference call last month.
--With assistance from Derek Decloet and Geoffrey Morgan.
