Canada to defy investment banking layoff trend

Despite the ongoing economic challenges, Canadian investment banks plan to keep staffing levels intact, sources said. This comes as the U.S. investment banks, including Goldman Sachs, have announced plans to cut thousands of employees amid a challenging macroeconomic environment. While Canadian banks had increased staffing levels during the pandemic, dealmaking activity has slowed, causing concerns about potential layoffs.

However, Canadian banks have yet to announce any such moves, and some even plan to increase headcount. Royal Bank of Canada, the country’s largest lender, saw a 71% increase in headcount at its capital markets division over the two-year period ending Oct. 31, 2022. Deal values in Canada fell 39.7% last year to $89.7 billion, while global deal values dropped 36% to $3.8 trillion, according to a report.

Despite a recent decline in dealmaking activity, Canadian banks are optimistic about the future. A spokesperson for Toronto Dominion Bank, which recently agreed to buy Cowen Inc., said it expects to continue growing its global investment banking business. Similarly, Desjardins plans to invest in its growing capital markets division.

Dominique Fortier, a partner at Heidrick & Struggles’ Toronto office, stated, “Right now there is a sense that there isn’t a need for cuts in the system…I don’t see that we’ll have the same decrease in terms of headcount coming.” Canadian investment banks aim to meet client expectations by providing the same level of coverage through business cycles, maintaining staffing levels to do so.