Butterfield may relocate jobs to Halifax
Butterfield Bank is aiming to cut operating costs as it moves some middle-office functions and back-office departments to its service centre in Canada.
It is expected that this will allow the bank to reduce its expenses in Bermuda and Cayman.
There has been no announced impact on jobs in Bermuda, but the bank acknowledges the ongoing changes “may involve the redefinition and relocation of select roles to Halifax”.
Favourable tax treatment is a carrot for the bank to create more jobs in Nova Scotia.
Butterfield has a service centre in Halifax, where it employs about 35 people. Last month it amended a six-year agreement it made in December 2015 with Nova Scotia Business Inc, increasing the projected number of jobs it will create in the province from 50 to 100.
By doing so, the bank is qualified to earn up to $1.7 million through payroll tax rebate over the six years of the agreement. However, that amount will be lower if it creates fewer than 100 jobs in Nova Scotia.
Halifax is about 40 or 50 per cent less expensive than Bermuda and Cayman, according to Michael Collins, Butterfield's chief executive officer.
When asked by The Royal Gazette if jobs will be lost in Bermuda as a result of building up its operations in Halifax, a spokesman said the middle-office positions for which it is presently hiring in Halifax are primarily additions to the overall headcount of the group.
The new positions are said to reflect investment in regulatory compliance and administration.
However, the bank is expecting cost savings in the second half of this year, with a reduced salaries bill being a key component.
In a presentation to accompany its first quarter earnings, Butterfield showed how salary and other employee benefits totalled $36 million from the start of January to the end of March. That was $1.8 million, or 5.3 per cent higher than the proceeding quarter, and $4.5 million more than the first quarter of 2016.
During an earnings conference call with analysts on April 26, Mr Collins was asked about the higher expenses. He said it was caused by two things: one was continuing compliance work “which all banks are doing”, the other was operating and employee costs.
“There's a bit of cost overlap in terms of building our Halifax service centre, so as we continue to move middle-office functions and nonclient-facing departments and positions to Halifax, obviously we have to staff up in Halifax before we start reducing expenses in Bermuda and Cayman.”
Mr Collins said the bank would start to see savings in the second half of the year as a result of its Halifax operations, and noted: “Bermuda and Cayman are very expensive jurisdictions. Halifax is about 40 per cent or 50 per cent less expensive, and also [has] a very good talent pool, so we're very excited about that.”
During the same discussion, Michael Schrum, Butterfield's chief financial officer, said the bank's renegotiation of its contract with outsource IT provider HP Enterprise, was bringing net cost savings of $4 million annually.
He said other cost savings will be “primarily on salaries” in the second half of the year.
Butterfield's Halifax operations range from finance to human resources, middle office and administration.
The bank's spokesman said: “As the bank continues to expand in Bermuda, Cayman and Guernsey, and as banking regulations and technology evolve, we will assess the back-office and middle-office functions that support our client businesses, making adjustments to maximise efficiency and enhance customer service.
“This may involve the redefinition and relocation of select roles (based in Bermuda, the Cayman Islands and elsewhere within the group) to Halifax.”
Disclosure: the author owns shares in Butterfield Bank