Canadian banks reduce workforces: Investment in technology

TORONTO (Reuters) – Canada’s top banks are shedding workers for the second straight year, moving toward leaner operations to satisfy investors demanding returns on tens of billions of dollars that lenders have poured into new technologies.

Five of Canada’s six biggest banks cut their workforces 4.4% from a year earlier to a combined total of 291,409 full-time equivalent employees as of Jan. 31. That is down 5.2% from a peak in the third quarter of 2019.

Despite growing optimism about a robust economic recovery, loan growth outside of mortgages has been stagnant due to the relatively slow pace of COVID-19 vaccinations in Canada and renewed lockdowns in some major cities.

“It’s very difficult to grow” revenues, said Todd Johnson, chief investment officer at BCV Asset Management, which owns shares of all the big banks.

Banks are likely to continue investing in technology at similar levels as the past few years, which will be “welcomed by investors as long as earnings and dividends continue to grow, and especially if tech investment displaces some labor costs,” he said.

The pullback in headcounts follows combined quarterly year-on-year growth of 4% to 5% in 2018 and 2019 across the six big banks. The cuts have reduced efficiency ratios, or non-interest expenses as a proportion of revenues, by about 2 percentage points from a year ago at most banks, disclosures show.

The phenomenon isn’t unique to Canada. U.S. and European banks last year joined Bank of Montreal and Canadian Imperial Bank of Commerce in announcing or resuming layoffs, with the former expected to shrink headcounts by an average of 5-10%.

While job cuts at banks in other countries have included technology roles, Canadian lenders are still growing in this area because their digital shift has lagged.

MORE CUTS TO COME

Toronto-Dominion Bank has been expanding its technology teams while redeploying employees from temporarily closed branches to other areas, Chief Executive Bharat Masrani said in an interview.

TD’s workforce has shrunk by about 0.7% from its peak in the fourth quarter of 2019, following quarterly growth of 4-6% over the prior year.

“You should view this as the bank constantly adapting to evolving expectations,” Masrani said. TD declined to comment on its technology spending plans.

Bank of Nova Scotia (Scotiabank), which has been divesting some international operations, and BMO, which has been working on improving efficiencies, have had the biggest year-on-year headcount reductions, 9.5% and 5.3% respectively.

Royal Bank of Canada, the country’s biggest lender, has been the only one to grow its workforce, by 1.9% from a year earlier, as it expands its wealth management divisions in the U.S. and Canada.

A spokeswoman said RBC continues to hire “selectively.”

In February, CIBC executives said the bank had saved C$800 million ($633.91 million) over the past five years by streamlining operations. It reinvested the funds in high-growth areas, and accelerated technology spending.

The other banks declined to comment.

Much of the technology investment so far has gone into automating manual processes such as enabling online mortgage applications and e-signing documents. Future investments will likely focus on beefing up cybersecurity, upgrading systems, and data and analytics, said Robert Colangelo, senior vice president for credit ratings at DBRS Morningstar.

Headcounts are unlikely to “grind lower for years and years,” but they are expected to lag revenue growth, said Brian Madden, portfolio manager at Goodreid Investment Counsel, who estimates that lenders have invested a combined C$10 billion annually in technology in the last few years.

With labour the biggest part of non-interest expenses, and the pandemic’s “unexpected turbo boost” to customer adoption of online banking, “most of the return on investment in tech spend is going to have to come from efficiency gains/headcount reductions,” he said.

($1 = 1.2620 Canadian dollars)

Ryanair narrows loss forecast for year to end-March

DUBLIN (Reuters) – Ryanair on Wednesday said it expected to post a smaller than expected loss in the year to the end of March and said the Irish airline expected to be “close to breakeven” in its current financial year.

Europe’s largest low-cost carrier said it expected a net loss of between 800 million euros and 850 million euros ($949 million-$1.01 billion) in the year to March 31 compared to previous guidance of 850 million to 950 million.

It said it expected traffic for the 12 months to the end of March 2022 to be towards the lower end of its previously guided range of 80 million to 120 million passengers, due to the slow rollout of COVID-19 vaccines in the European Union.

Ryanair is due to publish its annual results on May 17.

($1 = 0.8426 euros)

E3 2021: Biggest conference in gaming is going online

It’s been confirmed that E3, the biggest video game event in the world, is set to go ahead this year.

Instead of its usual Los Angeles location it will be held digitally and free for everyone to attend due to the pandemic. 

Nintendo, Xbox, Konami and Ubisoft are some of the developers which have agreed to participate. 

Notably absent are EA, Activision and Sony, but this isn’t unusual and often happened before the pandemic too. 

The show, which connects developers and publishers with gamers was forced to cancel last year due to global lockdowns.

Entertainment Software Association, which runs the event, hasn’t yet given any clues about how it will take hold.

Fans will be expecting to see lots of trailers, game demonstrations and pre-filmed interviews with the biggest names in the industry.

The whole event will be free to take part in – with no VIP packages or paywall features.

“For more than two decades, E3 has been the premier venue to showcase the best that the video game industry has to offer, while uniting the world through games,” said Stanley Pierre-Louis, who runs ESA. 

“We are evolving this year’s E3 into a more inclusive event, but will still look to excite the fans with major reveals and insider opportunities that make this event the indispensable centre stage for video games.” 

The event will run 12-15 June.

EasyJet: Two test travel plan would be too expensive

The boss of EasyJet has said testing requirements under a proposed “traffic light” system for international travel would be too expensive.

Under the system, no isolation would be necessary on return to the UK from so-called “green” countries.

But pre-departure and post-arrival tests would be required, potentially costing up to £200 each.

Johan Lundgren said: “You wouldn’t open up international travel for everyone, but only those who can afford it.”

Mr Lundgren told the BBC’s Today programme that the cost of getting the tests would exceed a typical EasyJet fare.

On Sunday, plans for a risk-based system to restart foreign travel were outlined, in which countries would be classified as “green”, “amber” or “red” based on their infection rates and vaccination coverage.

However, while the prime minister said he was “hopeful” that non-essential foreign travel could begin again on 17 May, he added that more data was needed before a firm decision could be taken.

Mr Lundgren said: “If you are ticking all of those boxes to become a green destination… [Multiple tests] don’t make sense to me and it would add to cost and complexities.”

He said that the testing requirement for those countries was “concerning”, but added that he still expected holidays in the summer months of July and August would be able to go ahead.

Scientists and ministers recently warned that holidays to destinations such as France, where Covid cases are rising, are “unlikely”. But Mr Lundgren said: “There’s a huge amount of pressure building up now in these countries to get going and make sure they can follow the example of the UK in its vaccine rollout.”

Other travel industry figures also called for clarity following the Prime Minister’s latest announcement on lockdown restrictions easing.

The Business Travel Association said the announcement was “beyond disappointing” and called for “a clear pathway to international travel and trade”.

Its chief executive, Clive Wratten, said moves to open borders had “once again been kicked down the road”.

“The business travel industry continues to be crippled by today’s lack of movement,” he added.

The boss of travel firm Thomas Cook, Alan French, also told the BBC’s Wake Up to Money that a lack of clarity around what type of tests might be required for passengers and when they would need to be taken was a let-down.

He said that overall, there were “glimmers of good news”, in that the earliest date for travel resuming on 17 May was not pushed back. “But actually, the details were missing and that was disappointing,” he said.

‘Disappointed’

On Monday, Mr Johnson said he did not want to see coronavirus re-imported from abroad and urged people to wait for a report from the Global Travel Taskforce on 12 April.

But Gemma Antrobus, owner of independent travel company Haslemere Travel, warned that business owners like herself faced a difficult path.

“Disappointed is putting it mildly. Where we hoped confidence would start to pick up, and more people would be interested in booking holidays… that just won’t come this week.”

She added that some customers had now moved bookings for holidays five times now amid changing restrictions.

“Every week we don’t have that confidence from consumers, business owners like myself just wonder what lies ahead.”

British Airways CEO optimistic travel can resume on May 17

LONDON (Reuters) – The chief executive of British Airways said he is optimistic that international travel can resume from May 17 despite Britain warning on Monday that it was too soon to say whether holidays could restart.

“We are optimistic that travel can resume on the 17th of May, and the British public should not lose hope, and we remain optimistic that this will happen,” BA CEO Sean Doyle told an online briefing.

Goldman Sachs London staff return to office: The Guardian

(Reuters) – Goldman Sachs Group Inc is preparing to have hundreds of staff return to its London office this week as companies eye a return to normal working conditions during the COVID-19 pandemic, according to a report by The Guardian.

Nearly 200 of Goldman’s 6,000 London employees could return to the office after the Easter break, the report said. bit.ly/3dwxVfw

Goldman declined to comment on the matter.

U.S. service sector activity index hits record high in March

WASHINGTON (Reuters) – A measure of U.S. services industry activity surged to a record high in March amid robust growth in new orders, in the latest indication of a roaring economy that is being boosted by increased vaccinations and massive fiscal stimulus.

The upbeat survey from the Institute for Supply Management (ISM) on Monday followed news on Friday that the economy added 916,000 jobs in March, the most in seven months. Economic growth this year is expected to be the strongest in nearly four decades.

“Vigorous services activity in March sets the stage for robust expansion in the second quarter,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. “All the right pieces for a faster services recovery – expanded vaccine eligibility, reopenings, and historic fiscal expansion – are falling into place.”

The ISM’s non-manufacturing activity index rebounded to a reading of 63.7 last month also due to warmer weather. That was the highest in the survey’s history and followed 55.3 in February.

A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast the index rising to 59.0 in March.

The ISM said comments from services industries indicated that “the lifting of COVID-19 pandemic-related restrictions has released pent-up demand for many.” It, however, noted that “production-capacity constraints, material shortages, weather and challenges in logistics and human resources continue to cause supply chain disruption.”

The survey added to a raft of reports from manufacturing to consumer confidence and employment in suggesting that the vastly improved public health situation and the White House’s $1.9 trillion COVID-19 pandemic rescue package were providing a powerful tailwind to the economy.

The ISM reported last week that its measure of national manufacturing activity soared to its highest level in more than 37 years in March. The services industry, hardest hit by the pandemic, could accelerate further as the economy re-opens. The U.S. Centers for Disease Control and Prevention said on Friday fully vaccinated people could safely travel at “low risk.”

U.S. stocks were trading higher, with the S&P 500 and the Dow hitting record highs. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.

COST PRESSURES RISING

The ISM survey’s measure of new orders for the services industry rebounded to an all-time high of 67.2 in March from a nine-month low of 51.9 in February.

Supply constraints are raising costs for businesses. The survey’s measure of prices paid by services industries jumped to 74 last month, the highest reading since July 2008, from 71.8 in February.

The surge in these price measures have added to concerns of higher inflation this year. But some economists say they are not reliable predictors of future inflation. Price pressures are seen driven by the generous fiscal stimulus and extremely accommodative monetary policy.

The ISM survey’s measure of services industry employment shot up to 57.2 last month, the highest reading since May 2019, from 52.7 in February. That confirmed the sharp acceleration in private services industry employment in March.

A separate report from the Commerce Department on Monday showed new orders for U.S.-made goods fell in February, likely weighed down by unseasonably cold weather. Factory orders dropped 0.8% after surging 2.7% in January.

Economists polled had forecast factory orders slipping 0.5% in February. Orders increased 1.0% on a year-on-year basis.

The weakness in factory orders is likely temporary and left intact expectations for robust gross domestic product growth in the first quarter. Growth estimates for the last quarter are as high as an annualized rate of 10.0%. Growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years.

Norwegian Cruise to mandate COVID-19 vaccination for guests and crew

(Reuters) – Cruise operator Norwegian Cruise Line Holdings Ltd said on Monday it would require mandatory vaccinations for guests and crew when it restarts trips from U.S. ports starting July.

The company’s announcement follows the U.S. Centers for Disease Control and Prevention’s (CDC) latest guidance last week to the cruise ship industry, including the need for COVID-19 vaccinations.

Akshay Kumar: Bollywood star in hospital with Covid

Bollywood actor Akshay Kumar has been hospitalised a day after testing positive for Covid-19.

The actor said he was doing fine but decided to get admitted as a “precautionary measure under medical advice”.

Many crew members of the film he was working on in Mumbai city have also tested positive. 

Several Indian states have reported a sharp increase in Covid-19 case numbers in recent weeks.

The western state of Maharashtra, where Mumbai is located, has been the biggest contributor to the surge. India on Sunday breached the the 100,000 mark for the first time since the pandemic began in March last year. Maharashtra alone accounted for 57,000 new cases on Sunday. The BBC is not responsible for the content of external sites.View original tweet on Twitter

The state has announced several new limitations to curb the spread but infections continue to rise, affecting Bollywood and several other industries.

A number of popular actors, including Ranbir Kapoor, Aamir Khan, Alia Bhatt and Kartik Aaryan, have tested positive in the past few days. Legendary cricketer Sachin Tendulkar is being treated at a hospital after testing positive – his condition is said to be stable.

The future of the cash-rich Indian Premiere League cricket tournament is also in doubt. It’s due to start on 9 April and Mumbai is slated to host a number of matches.

Officials at the Board for Cricket Control in India (BCCI) say the tournament will go ahead but fans will not be allowed inside stadiums. 

Indian spinner Axar Patel and support staff of different teams have already tested positive.

The recent surge comes after a sharp drop in India’s Covid caseload. In January, India was reporting less than 15,000 cases daily. But numbers began to spike again in March, largely driven by poor test-and-trace and lax safety protocols.

Since the pandemic began, India has confirmed more than 12.2 million cases and over 163,000 deaths. It now has the third-highest number of infections in the world after the United States and Brazil. But its number of deaths per capita is far lower.

Source: BBC

Covid: Europe’s vaccine rollout ‘unacceptably slow’ – WHO

The World Health Organization (WHO) has criticised the rollout of coronavirus vaccines in Europe as being “unacceptably slow”.

Tents for a COVID-19 vaccination centre are installed inside the national stadium of France, Stade De France, in Saint Denis, near Paris, France, 31 March 2021
image captionEurope’s vaccination campaign has been hit by delays

It also says the situation in the region is more worrying than it has been for several months. 

Vaccination campaigns in much of Europe have been hit by delays and the number of infections is rising.

The EU has been criticised for the pace of its vaccination programme – only 16% of its population has received the jab, compared with 52% in the UK.

But the EU says the UK has had an unfair advantage in contracts it signed with vaccine manufacturers, some of whom are based within the EU.

“Vaccines present our best way out of this pandemic… However, the rollout of these vaccines is unacceptably slow” and is prolonging the pandemic in the wider Europe region, WHO director for Europe Hans Kluge said in a statement.

“We must speed up the process by ramping up manufacturing, reducing barriers to administering vaccines, and using every single vial we have in stock, now,” he added.

Last week saw increasing transmission of Covid-19 in the majority of countries in the WHO European region – which includes more than 50 countries and extends from Greenland to the far east of Russia – with 1.6 million new cases and close to 24,000 deaths, the WHO said. 

Only 10% of the nearly 900 million people in the region have had a single dose of coronavirus vaccine.

It remains the second most affected by the virus of all the world’s regions, with the total number of deaths fast approaching one million and the total number of cases about to surpass 45 million, it added.

It also warned of the risks of greater spread associated with increased mobility and number of gatherings over the forthcoming religious holidays of Passover, Easter and Ramadan. 

Some 27 countries of the more than 50 included in the WHO Europe region have implemented partial or full coronavirus lockdowns.

What else is happening around Europe?

  • After President Emmanuel Macron announced new restrictions in France on Wednesday evening, Prime Minister Jean Castex said on Thursday morning at the National Assembly: “The third wave is here.” He announced more detailed measures including a ban on alcohol in public spaces. France is set to begin a limited lockdown for four weeks from Saturday night, with travel restrictions extended from 19 areas to the entire country
  • Eurovision is to take place in Rotterdam’s Ahoy arena in May. The Dutch government wants to use the event as a test with 3,500 spectators allowed for all the rehearsals and the three big shows. There will be extensive safety measures for the 39 countries taking part
  • As infections surge in Belgium, a Brussels court has ruled that all the country’s Covid measures have to be lifted within 30 days because the legal basis is not sound enough. The court backed a lawsuit from the League for Human Rights. Interior Minister Annelies Verlinden has appealed against the ruling
  • Spain is seeing a new rise in cases with an average incidence of up to 152 cases per 100,000 over the last two weeks. Madrid and Navarre in the north are among the areas seeing a spike
  • Cases are also rising in Germany, with 24,300 in the past 24 hours. Almost 90% of infections involve the UK (Kent) variant
  • The Austrian capital, Vienna and two other provinces in the east have imposed an Easter lockdown to help ease the pressure on hospitals. Austrians have been told to stay at home, except for necessary activities such as food shopping, work, exercise and helping their families
  • A new German survey suggests only 25% of people have faith in the government’s vaccination strategy. The Oxford-AstraZeneca vaccine has been limited to over-60s in Germany and 40% of those surveyed said they did not want it