Canada’s third-largest bank is shedding 1,500 jobs — most of them in Canada — despite earning high profits, raising concerns other Canadian banks may follow suit.

Bank of Nova Scotia, the country’s most international bank, also announced Tuesday that it would close or downsize 120 branches outside Canada, about 10 per cent of its international footprint.

The bank also said it is boosting its loan loss provisions on some hospitality properties in the Caribbean, saying they’re taking longer than expected to recover from the impact of the 2008 financial crisis on tourism.

The moves will cut the bank’s fourth-quarter after-tax profit by $341 million, the bank said. But it will save about $120 million a year in annual operating expenses when fully implemented over the next two years, the bank said.

About 1,000 jobs will be cut in Canada, mainly in mid-office functions in branches across the country, but also in the Toronto head office. No Canadian branch closings are planned.

The other 500 job cuts are related to branch closings in Latin America, Mexico and the Caribbean, where acquisitions have led to duplication in some areas.

The bank employs 87,000 people, more than half outside Canada.

“Today’s announcement is a result of making some difficult but necessary decisions to support our long-term goals,” said Brian Porter, who became Scotiabank’s president and chief executive officer a year ago.

“We are confident that these initiatives will allow us to continue investing in high-growth areas of the bank. Notwithstanding these unusual charges, we remain confident that our 2014 reported results will be within our financial objectives for the full year,” Porter said in a statement Tuesday.

The announcement raised concerns that other banks may follow suit as they head into the first quarter of their next fiscal year, which began Nov. 1, particularly since most have new leaders eager to make their mark.

“Investors may rightfully be concerned that Scotia’s announcement may signal a greater than usual house cleaning in the fourth quarter, in order to set the stage for the new class of chief executive officers,” John Aiken, analyst at Barclays Capital, wrote in a note to clients.

“We would expect that Scotia’s announcement today will cast a shadow on the other banks as investors attempt to extrapolate meaning towards its peers,” Aiken also wrote.

Scotiabank shares traded lower after the news, while most other banks were either flat or down slightly.

The job cuts drew criticism on Twitter, where several contributors noted Scotiabank had earned $5.57 billion in profit so far this year. “I guess they’re not as rich as they think,” several tweets noted, a play on the bank’s advertising slogan, “You’re richer than you think.”

“These are good, relatively qualified, middle-class jobs that will be eliminated in Canada,” said David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives.

Macdonald said the announcement raises concerns that work may be outsourced to India, a growing trend in many white-collar businesses.

Canada’s banks received $112 billion in government support at the height of the 2008 financial crisis, Macdonald noted. Perhaps those loans, which have all been repaid, should have been tied to a commitment to preserve jobs in Canada, he said.

Scotiabank’s Porter said the Canadian job reductions “represent the final phase of centralization and automation of a number of mid-office branch functions in order to serve our customers better and faster through operations that are efficient and low-cost by design.”

The company has been investing in technology to boost productivity for several years and had already reduced some jobs by attrition or relocation.

On a conference call, most analysts were focused on the bank’s international operations. The increased loan losses in the Caribbean accounted for $109 million of the pre-tax write-offs, raising concerns there could be more in future.

The overall announcement was “modestly negative” for the bank’s fourth-quarter earnings, Darko Mihevic, analyst at RBC, wrote in a note to clients. “To some degree, we believe these charges demonstrate their commitment to cost control,” he added, noting most of the charges are one-time expenses.

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“In our view, the issue now is whether or not they are still capable of generating high loan growth and whether or not loan losses are still contained,” Mihevic wrote.

Scotiabank reports its fourth quarter results on Dec. 5.

With files from The Canadian Press

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