Canaccord restructuring U.K. capital markets business

Citing the impact of Brexit-related uncertainty on the financing environment, Canaccord Genuity Group Inc. is restructuring its capital markets business in the U.K., cutting jobs and taking a $12 million charge.

The Toronto-based firm announced the restructuring Monday with the goal of generating sustained profitability throughout the unit.

“A prolonged period of political and market uncertainty in the U.K. has impacted capital raising and related activities in the region resulting in unacceptable returns,” the firm said.

As a result, it will take a $12 million charge for its fourth quarter (ending March 31), reflecting the cost of layoffs and fixed assets impairment.

“The plan is expected to result in a significant reduction in the company’s London-based capital markets staff,” it said in a statement.

The scaling back of the capital markets business does not impact the firm’s wealth management businesses in the U.K. or Europe, the firm said, and the capital freed up as a result of the restructuring will be reallocated.

“The plan we have announced today will allow us to redeploy excess capital from our U.K. capital markets business, reduce our exposure to the volatility and historical losses that we have experienced with capital raising, advisory and trading activities in the region, and align our U.K. capital markets business with our broader global capabilities,” said Canaccord president and CEO Dan Daviau in a statement.

“We remain deeply committed to growing our wealth management business in the U.K. and Europe and we are hopeful that the capital raising and advisory environment in the U.K. for small and mid-cap issuers improves for the benefit of all businesses and industry participants.”

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