A Report on Employment Trends in the Financial Services Sector:
London, Middlesex, Elgin, Oxford, Huron and Lambton

INDUSTRY OVERVIEW

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• In recent years, however, London’s preeminence as a "financial services head office city" has been challenged. London Life Insurance Company, which was founded in London in 1874 and played a large role in the history of the city, was bought out by Great-West Life in 1997. The change in leadership meant that London Life’s core business interests shifted from a focus on group insurance to individual insurance. All regional customer service issues and call centre operations are now handled at the London office and most other operations are done in Winnipeg.

• The former Avco, another staple London financial services provider also underwent a change of ownership in the 1990s. Avco had been located in London for over 30 years when the announcement came in 1998 that its California based parent had put the company up for sale. There was concern that London could lose this well established business until a Dallas based firm, Associates First Capital Corp., decided to buy the company and move its Canadian head office to London. The decision to consolidate in London was based on London’s facilities, technology and quality of staff. In order to maintain brand recognition, the company operated under both names in their branches for a period, but as of January 2000, the company was officially called The Associates.

• Most recently, London was struck by the news of another significant alteration in its financial services landscape. On August 3, 1999, TD Bank announced its plan to buy out the successful London based Canada Trustco. For Londoners, Canada Trust is a major landmark. The company was first established here in 1864 and, at the time of the announcement, employed about 2,000 people in its "twin towers" head office downtown and another 900 in branches across Southwestern Ontario (Berton, Paul.1999."London Will Find New Leaders" The London Free Press,Wed.Aug 4:D1). The merger of the two was approved and on February 1, 2000 the new TD Canada Trust began its first day of operations as Canada’s third largest bank. Up to 4,900 positions are expected to be lost to the merger over the next three years, and about 275 branches are likely to be closed. Yet, chief executive, CT Financial Services, Edmund Clark, has made a public commitment to keep the same number of jobs in London as before the merger (De Bono, Norman.2000."Jobs Safe, Canada Trust Staff Assured" London Free Press tues.Feb.1: A1&A8). About 2,000 of those lost jobs are expected to come from attrition.

• It is still unclear as to what types and quality of jobs will be located in the London office. At the outset of the merger it was suggested that London may house the credit card (As a condition of sale, Ottawa required that Canada Trust's London-based Mastercard division be sold. Citibank Canada announced its purchase of the division in June 2000 and has also vowed that no jobs will be cut. Ibid.) and call centre operations. Group RRSP business, estates, trusts, collections and some administrative processing were also mentioned as lines that could be headquartered here (Paraskevas, Joe & Price, Barbi.1999."Jobs Safe in London Banks Vow" London Free Press Wed. Aug. 4: A1). Skeptics of the merger point out that although jobs may not be lost here right away, over time it will be difficult to keep track of the number of employees that do lose their jobs(De Bono, Norman.2000 ."Jobs Safe Canada Trust Assured" London Free Press Tues Feb. 1:A1 &A8.). Some analysts of the merger have suggested that it is unrealistic to think that there would be no job losses in London, "there will be positions coming out of both (companies), but the vast majority will be out of Canada Trust"/(de Bono, Norman.2000."London to Feel Brunt of Job Cuts, Says Analyst" London Free Press, June 10:D1.). TD officials however, have repeatedly stressed that any job losses in London will be replaced with new jobs.

• The bank still faces many challenges in amalgamating and integrating the two companies. Decisions are yet to be made on what jobs will be done, by whom, and in what location. Merging the technical aspects of the banking systems and network decisions on such things as the number and location of branches and ABMs lie ahead.

• In light of all the turbulence in London’s financial services sector, our interviewees were asked to comment on the future of the city’s financial district. Most respondents agreed that London will likely not regain its prominence as a "head office city" when it comes to financial services. A couple of our interviewees described it as "a bygone era".

• Researchers have noted that financial services compete best when clustered. The industry is said to derive substantial value from co-location by "encouraging frequent interaction with peers, scale to support a sophisticated closely linked supplier base, access to specialized skills, the ability to stay tuned to industry dynamics and innovation spurred by competition and frequent idea exchange" (Boston consulting Group.1997 .Financial Services at the Crossroads:"The current and Potential role of Financial Services in the Greater Toronto Area"e; Sponsored by Scotiabank:Toronto:18). It is also noted that these clusters have a self-reinforcing nature. The presence of a healthy financial services core will attract new entrants and encourage business to grow (Ibid). Thus, the recent changes to London Life and Canada Trust have weakened London’s ability to support a financial services cluster.

• At the same time, the majority of our respondents were confident that there would be jobs available in financial services, noting that as long as there are people, businesses and money in the city, there will be a need for financial services. As one respondent noted, " much of what happens here is driven by the market place ... if the London economy flourishes, so will the financial services sector". A few of our respondents indicated that London is ideally situated in the middle of Southwestern Ontario, and that our best chance for growth may lie in marketing ourselves as a "regional centre". One respondent said " I think London should view itself not as a city but as part of a region, a region that is diverse and has many things to offer". Some felt that most of London’s future financial services jobs would be "lower end" jobs in "back office" or call centre operations. A couple of our interviewees were enthusiastic about London’s potential for growth in this sector, expressing the view that "good things could really happen here" and that "the city is right on the edge . . . we could see some significant positive changes".

• Many interviewees also had positive things to say about doing business and living in the city. They enjoy doing business in London because costs of labour, real estate and overhead are relatively low. They also noted the high caliber of workers available in London. There is a pool of well-educated, highly-skilled, experienced people from which to draw. A few interviewees mentioned one bonus of doing business in London that they felt was under recognized, was the relatively low degree of worker turnover. Financial services companies in cities like Toronto tend to have a high degree of turnover as employees have a large number of firms to which they can apply. Opportunities for switching companies may be fewer in London, but this creates a fair degree of loyalty among workers and a stability within the business.

• Overall, there was a consensus among our interviewees that the financial services sector in London is no longer as strong as it once was. There is a widespread feeling among those in the local industry that London is unlikely to see a return of financial services head offices in the foreseeable future. Despite this skepticism, it is important to note that most respondents also felt that there will be financial services companies and jobs in London as financial planning, wealth management, call centres and technological aspects of the sector continue to grow.