NOTE 19: PROVISIONS AND CONTINGENT
LIABILITIES
Other than as described below, there have been no new
significant events or transactions except
as previously identified in Note 26 of
the Bank’s 2023 Annual
Consolidated Financial Statements.
(a)
The Bank continued to undertake certain
measures in the second quarter of 2024 to reduce
its cost base and achieve greater efficiency. In connection with these
measures, the Bank incurred $
165
456
million of restructuring charges during
the three and six months ended April 30,
2024, respectively. The
restructuring costs primarily relate to: (i)
employee severance and other personnel-related
costs recorded as provisions and (ii) real estate
optimization mainly
recorded as a reduction to buildings.
(b)
LEGAL AND REGULATORY MATTERS
Other than as described below, there have been no new
significant legal and regulatory matters,
and no significant developments to the
matters previously
identified in Note 26 of the Bank’s 2023 Annual
Consolidated Financial Statements.
In the ordinary course
of business, the Bank and
its subsidiaries are involved
in various legal
and regulatory actions, including
but not limited to civil
claims and
lawsuits, regulatory examinations,
investigations, audits,
and requests for information
by governmental, regulatory and
self-regulatory agencies and law
enforcement authorities in various
jurisdictions, in respect of our businesses
and compliance programs. The
Bank establishes provisions
when it becomes
probable that the Bank
will incur a loss and
the amount can be
reliably estimated. The Bank
also estimates the aggregate
range of reasonably possible
losses
(RPL) in its legal and regulatory
actions (that is, those which
are neither probable nor
remote), in excess of provisions.
As at April 30, 2024, the
Bank’s RPL is
from
zero
1.31
billion (October 31, 2023
– from
zero
1.44
billion). The Bank’s provisions
and RPL represent the
Bank’s best
estimates based upon currently
available information for
actions for which estimates
can be made, but
there are a number of
factors that could cause
the Bank’s
provisions and/or RPL to be
significantly different from its actual
or RPL. For example,
the Bank’s estimates involve
significant judgment due to
the varying stages
of the proceedings, the
existence of multiple defendants
in many proceedings
whose share of liability
has yet to be
determined, the numerous
yet-unresolved
issues in many of the
proceedings, some of
which are beyond the Bank’s
control and/or involve novel legal
theories and interpretations, the attendant
uncertainty
of the various potential outcomes
of such proceedings, and the fact
that the underlying matters will change
from time to time. In addition,
some actions seek very
large or indeterminate damages.
The Bank has been responding to formal and
informal inquiries from regulatory authorities
and law enforcement concerning its
Bank Secrecy Act
/anti-money
laundering compliance program, both generally
and in connection with specific clients,
counterparties, or incidents in the U.S., including
in connection with an
investigation by the United States Department
of Justice. The Bank is cooperating
with such authorities and is pursuing efforts
to enhance its
Bank Secrecy
Act
/anti-money laundering compliance program.
In the second quarter, the Bank recorded an initial provision
of $
615
450
million) in connection with
its discussions
with one of its U.S. regulators related to
this matter. The Bank’s regulatory and law enforcement
discussions with three U.S. regulators (including
the regulator
previously referenced) and the U.S.
Department of Justice are ongoing. The Bank
anticipates non-monetary penalties and
additional monetary
penalties. This provision does not reflect
the final aggregate amount of potential
monetary penalties or any non-monetary
penalties, which are unknown and not
reliably estimable at this time.
The Bank and certain of its subsidiaries have
reached a settlement in principle relating
to a civil matter, pursuant to which the Bank has recorded
a provision
of $
274
In management’s opinion, based on its
current knowledge and after
consultation with counsel, the
ultimate disposition of these
actions, individually or in the
aggregate, will not have a
material adverse effect on the
consolidated financial condition
or the consolidated cash
flows of the Bank. However, because of
the
factors listed above, as well as
other uncertainties inherent in litigation
and regulatory matters, there is a
possibility that the ultimate
resolution of legal or
regulatory actions may be material to
the Bank’s consolidated results of operations for
any particular reporting period.