Toronto-based GMP Capital Inc. (TSX: GMP) Tuesday announced the end of a comprehensive review that triggered staff cuts and the “significant” transfer of support staff from GMP Securities L.P. to its partners at Richardson GMP Ltd.
GMP began the process during fiscal 2012 in response to challenging market conditions.
GMP says the staff reductions, together with salary reductions and a rationalization of the firm’s real estate, are expected to generate annual fixed cost savings in excess of $5 million compared with January 2012.
Over the past 12 months, GMP Securities has eliminated 52 positions, including 15 earlier Tuesday. This represents a 16% reduction in both total headcount and fixed compensation expense at the domestic broker dealer operation.
“The goal was to preserve the traditional highly variable nature of our cost base at GMP Securities and ensure costs remain closely aligned with the level of business activity in all market conditions,” says Harris Fricker, president and CEO, GMP.
GMP says that during the course of the review it was determined that Richardson GMP was able to assume direct ownership and control over key support employees previously employed by GMP Securities.
The 51 employees transferred to Richardson GMP will continue to support Richardson GMP in the same capacity areas previously covered by historical joint arrangements.
“Having these employees dedicated to Richardson GMP will continue to enhance and build our wealth management offering,” says Andrew Marsh, president and CEO, Richardson GMP.
“The transfer will positively impact Richardson GMP’s financial performance and, as important, will in no way impact the considerable revenue synergies between GMP and Richardson GMP,” the two groups said in a release.
GMP Securities will continue to provide settlement, clearing, custody and execution support in keeping its introducing/carrying broker relationship with Richardson GMP.
“We continue to view Richardson GMP as a valued business partner and the wealth management business as a key growth component for our firm,” says Fricker.