Has BMO been forced to eat its own words? That’s how brokers are interpreting the bank’s recent decision to cut hundreds of jobs considering only last year it said an increase in mortgage specialists was the best way of growing market share.
“Absolutely it is a victory for the mortgage broker channel,” Kelvin Seepersad of Mortgage Intelligence told MortgageBrokerNews.ca. “They have used the broker channel and supported us (in the past) and I think (it would be smart if) they (returned) to doing so.”
Bank of Montreal CEO Frank Techar confirmed 1,000 job cuts Tuesday, cost-cutting focused on its personal and commercial banking team, which includes its mortgage specialists.
“For the quarter we overshot a little bit,” Techar said, suggesting the cuts may have been overzealous. “We do have some outstanding vacancies that I would expect will fill as we go into the first quarter.”
While the bank also announced $4.2 billion profit for 2013, brokers are arguing that the layoffs validate the value the broker channel represents to banks looking to contain origination costs at the same time bring new, young clients into the fold.
Since quitting the broker channel, BMO has struggled to hold onto its market share with that and other key demographics. The job cuts suggest to some industry players that the bank hasn’t necessarily found mortgage specialists to be the remedy it had hoped for.
Last year, BMO CFO Thomas Flynn said, “We're going to have to take some business from others as the market is slowing around us. We plan on doing that through the activation of the investment in our sales force, our mortgage specialist sales force, which continues to grow.”
That may not have panned out, and Seepersad believes it would be in the bank’s best interest to return to the broker channel.
“I still think it’s cheaper for the bank to originate through the brokerage channel,” Seepersad said. “They don’t have to pay for the overhead, the salary, the percentage basis point payout.
“There is a greater benefit for them to use a mortgage broker.”