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Canaccord Genuity to trim staff by 4% to weather weak market conditions

Last updated: 18:06 02 Feb 2015 GMT, First published: 19:06 02 Feb 2015 GMT

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Canaccord Genuity Group (TSE:CF) fell to the lowest in more than seven weeks after Canada’s largest non-bank brokerage said it is cutting the size of its global capital markets workforce by 4 percent to reduce operating.

Shares retreated to C$6.15, the lowest intraday price since December 12 before trading at C$6.24, down 2.2 percent, at 1:40 p.m. in Toronto. Canaccord stock is down more than 38 percent in the past three months.

Canaccord is cutting jobs in its U.K., Europe and U.S. capital-markets units at a pretax cost of about C$22 million, the Vancouver, British Columbia-based company said in a statement yesterday. The brokerage had 2,018 employees as of September 30, which would put the job cuts at about 80 people.

Canaccord, which offers brokerage, capital markets and wealth management services, said the move reflects “current market conditions.” The world economy is slowing and with oil prices down 57 percent since last summer, there has been significant impact on oil-related businesses.

In November, chief executive officer Paul Reynolds said the company experienced a slowdown in equities trading and transactions in the fiscal second quarter amid volatile markets. The company’s U.S. operations were especially affected, Reynolds said.

The drop in the price of oil and commodities generally is weighing on financial-services firms as transaction activity and deal flow shrink. Equities markets have also shown volatility in recent months.

More than 55 percent of the company's revenue is generated outside Canada, according to its latest quarterly report.

Earlier this month, Canaccord Genuity said it is opening an investment banking and advisory office in Dubai.

It has existing operations in 10 countries, including Canada, Britain, the U.S., France, Germany, Australia, Hong Kong and Singapore. 

Bank of Nova Scotia analyst Sumit Malhotra said in a recent note to clients he expects Canaccord Genuity Corp. to post an operating loss of $0.06 per share in the fourth quarter of 2014, its first operating loss in two-and-a-half years.

The company is scheduled to release quarterly earnings after markets close on February 4.

 

 

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