Monday, March 30, 2009
Malcolm Taylor for National Post
Canada's largest independent broker Canaccord Capital Inc. is shedding a substantial chunk of its staff for the second time in less than six months, this time cutting deep into its pool of brokers.
Canaccord is getting rid of about 20% of its broker contingent by targeting "under-performing" brokers over the next couple of days, said Scott Davidson, managing director and global head of marketing and communications.
"We are in the process of reducing our broker count by about 75," said Mr. Davidson, adding that the firm hopes to retain the bulk of the business through a program that provides bridge financing to remaining brokers who want to buy books of business from those who are departing from the firm.
"This is a decision based on strategy, not market conditions," Mr. Davidson said.
Last October, Vancouver-based Canaccord blamed the market meltdown when it cut 170 jobs, or 10% of global workforce, and reduced executive salaries by as much as 20%. Many of those jobs were administrative, as Canaccord along with other broker-dealers attempted to weather the growing financial and economic downturn without losing their big money-producing employees.
October proved to be a brutal month in the business, with sales and commission trading drying up and investment banking activity languishing at fellow independents such as GMP Capital Trust. Last month, GMP said the worst carnage in the fourth quarter took place in October in its capital markets businesses.
Gyrating global stock markets have added to the pain at broker-dealers.
Canaccord had private client assets under administration of $9-billion at the end of December, down 39% from $13-billion a year earlier.
Since November, Canaccord's private client business has been run by John Rothwell, a 30-year financial services veteran with firms including Midland Walwyn Capital and Fidelity Investments.
A company statement when he was hired described his mandate as "focused on talent acquisition, product and service development, and enhanced revenue and asset growth."
In February, Canaccord began to lay out plans for a retention bonus to reward top performers that insiders say will rival the packages at some of Canada's bank-owned broker-dealers.
The bonus plan, which is understood to increase substantially for brokers who generate $1-million in revenue, was promised when Mr. Rothwell joined the firm.
Analysts say tough market conditions have increased competition between independent dealers and bank-owned dealers in Canada as the overall business pie has shrunk.
Monday, MF Global Ltd., a broker of exchange-traded futures and options contracts, shuttered offices in Vancouver, Calgary and Winnipeg that housed 26 brokers.
The brokerage also has offices in Toronto, Montreal and Markham, Ontario. MF Global, the former brokerage unit of hedge fund manager Man Group Plc, lost 94% of its market value last year.
© 2009 The National Post Company. All rights reserved.
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