Major bank announces it will close a key area of its business immediately and cuts jobs with no prior warning

THE third-largest bank in Canada has announced it will immediately close a key business unit and cut jobs without warning.

The Bank of Montreal announced on Saturday its plan to shut down its retail auto financing business.

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“By closing the indirect retail auto financing business, we have the opportunity to focus our resources on areas where we believe our competitive position is strongest,” BMO told Reuters.

BMO worked with car dealerships as part of its retail auto financing business, arranging financing for buyers who made monthly payments to the bank.

The company said it will help support employees affected by job cuts.

It is currently unclear how many bank employees will lose their jobs.

Paul Hunsley, head of automotive retail finance at BMO, said the company would end its dealership agreement on Friday, according to a letter sent to car dealers and seen by Reuters.

However, the letter said BMO would fund all contracts submitted and approved before Friday.

The closure of the bank’s retail financing business comes after BMO’s retail bad debt provisions rose to C$81 million ($60 million).

As a rise in interest rates slows the Canadian economy, banks are investing more money to counteract an expected rise in bad loans.

BMO has looked to the United States to help grow the company, acquiring San Francisco, California-based Bank of the West for $16.3 billion in February.

According to the newspaper, the United States currently accounts for over two-thirds of BMO’s total profits.

As Canada’s third-largest bank changes its business model, the CEO of Citigroup, the third-largest bank in the United States, announced restructuring plans.

According to Wednesday’s press release, Citi plans to simplify itself by eliminating layers of management and having the heads of its five divisions report directly to CEO Jane Fraser.

“I have every confidence that our bank will achieve our full potential and we are making bold decisions to deliver on our commitments to all of our stakeholders,” Fraser said.

“These changes remove unnecessary complexity across the bank, increase responsibility for delivering excellent customer service and strengthen our ability to benefit from the natural connections between our businesses, all with the aim of achieving our medium-term goals and transformation. “

The restructuring plan includes job cuts, although the company has not yet settled on a number, people familiar with the matter told CNBC.

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