Scotiabank has decided to make at least 1500 of its workers redundant and will downsize around 120 of its international branches, despite making profits!

Why would Scotiabank do that though? It could be imitating BMO’s decision to do the same in 2013 or it could actually be a prudent decision because it could benefit them in the long run, since speculation predicts that interest rates will be very high in the future. However, in the short run this decision to lay off workers will have an adverse effect on the bank, since the their stock prices will fall.

Moreover, the productivity of the bank will improve as, it has decided to replace workers with automated technology. Thus, in my opinion, even though Scotiabank will have to pay the restructuring charges for laying off workers, which will reduce the bank’s profit levels, in the long run, the bank is saving itself from a major risk of losing out on huge profit levels, since, as speculated, if interest rates become very high, people will stop borrowing from the banks.

In conclusion, Scotiabank has made a good decision by speculating and preparing for a potential storm.

article link: http://www.cbc.ca/news/business/scotiabank-to-cut-1-500-jobs-amid-restructuring-charges-1.2822896