BMO Financial group is raising its minimum wage for employees who had worked for the recently acquired Bank of the West as well as existing workers who had not been covered by an earlier pay hike.
Toronto-based BMO says that beginning March 12 all existing full-time and part-time U.S. employees paid on an hourly basis will receive at least $20 per hour. BMO last year raised its minimum wage to $20 from $18 for certain workers — full and part-time U.S. employees working in branch locations and customer contact centers.
The new policy will also cover Bank of the West employees after the integration of the two companies, which is scheduled to be completed in September. Bank of the West had increased its minimum wage to $15 per hour in 2018.
BMO vowed to keep open all Bank of the West branches and to retain the San Francisco bank’s front-line branch employees after the $16.3 billion acquisition, which received regulatory approval last month and became official on Feb. 1. The combined company also has agreed to a five-year, $40 billion community benefits plan to allay any concerns by regulators and consumer groups about the deal’s impact on the public.
Buying Bank of the West gave BMO an additional 9,300 employees, 500 branches and 1.8 million customers.
“BMO is committed to helping team members from BMO U.S. and recently acquired Bank of the West thrive and achieve progress in their professional and personal goals,” a BMO spokesperson said in an emailed statement.
The wage increase is part of a broader wave of employee-compensation improvements banks have undertaken amid a tight labor market and ongoing debate about increasing the federal minimum wage from $7.25 per hour to at least $15.
Last week, Blue Ridge Bankshares in Virginia announced a minimum wage increase to $18 per hour, while Popular, the U.S.-based subsidiary of Banco Popular in Puerto Rico, raised base hourly pay to $15 at the beginning of this year from $13.
In recent years, many other banks have also proactively increased their minimum wage policies, corporate moves that have led to higher reported expenses amid a weakening economy and strategic shifts to focus on digital banking services.
Last July, hourly workers at Bank of America began receiving a minimum wage of $22 as part of the bank’s plans to increase its hourly base pay to $25 by 2025. BofA CEO Brian Moynihan said on a fourth-quarter earnings call last month that though wage hikes contributed to a 5.4% increase in noninterest expenses year over year, the bank has not announced layoff plans.
During a fourth-quarter earnings call in January, Truist financial CEO William Rogers said that a minimum wage increase to $22 per hour has helped improve employee recruitment and retention and created “an all-around better client experience.” However, higher labor costs will contribute to an expected 5% to 7% increase in expenses this year, Rogers said.