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Skip to Content Subscribe and you could win a Fairmont Signature Sleep Experience and more! Don't Miss Out>> Subscribe and you could win a Fairmont Signature Sleep Experience and more! Don't Miss Out>> Sections Search Search windsorstar.com Perform search Windsor Star Share Share this Story : Scotiabank CEO shifts focus to North America, vows 'significant' change in mindset * Copy Link * Email * Facebook * X * Reddit * Pinterest * LinkedIn * Tumblr Subscribe Sign In User My Account Search windsorstar.com Perform search * Subscribe * FAQ * My Account * Manage My Subscription * Manage Print Subscription * Our Offers * News * Local News * National * World * True Crime * Weather * Podcasts * Archives * Local Sports * Sports * Hockey * NHL * Windsor Spitfires * Soccer * International Soccer * MLS * Football * NFL * NCAA Football * CFL * Baseball * Detroit Tigers * Basketball * NBA * NCAA * Windsor Express * Golf * Curling * Tennis * Auto Racing * Fighting * Opinion * Editorials * Columnists * Letters * Business * Automotive * Technology * Gaming * Personal Tech * Space * Real Estate * Energy * FP Markets * FP Headlines * FP Money * Small Business * Arts * Local Arts * Celebrity * Movies * Movie Listings * Television * TV Listings * Music * Books * Life * Shopping Essentials * Home Living * Tech * Style & Beauty * Kitchen & Dining * Personal Care * Entertainment & Hobbies * Gift Guide * Travel Guide * Deals * Fashion & Beauty * Parenting * Relationships * Homes * Condos * Decorating * Gardening * Renovating * Vacation Homes * Food * Recipes * From the Vault * Health * Healthing * Diet & Fitness * Family & Child * Men * Women * Seniors * Sexual Health * Royals * Travel * Advice * Horoscopes * Contests * National Contests * Puzzles * New York Times Crossword * Comics * Healthing * Driving * All Driving * News * Reviews * Car Comparison * Buyer’s Guide * ePaper * Remembering * Browse Notices * Place an Obituary * Place an In Memoriam * Classifieds * Local businesses * Place an Ad * Business Card Directory * Celebrations * Pet Posts & Adoptions * Real Estate Showcase * Real Estate E-Edition * Working * Shopping * This Week's Flyers * Auction * Newsletters * Manage Print Subscription * Profile * Settings * My Subscriptions * Newsletters * Customer Service * FAQ * Sign Out * News * Local Sports * Sports * Opinion * Business * Arts * Life * Puzzles * Comics * Healthing * Driving * ePaper * Remembering * Newsletters * Manage Print Subscription Advertisement 1 * * * * * Share this Story : Scotiabank CEO shifts focus to North America, vows 'significant' change in mindset * Copy Link * Email * Facebook * X * Reddit * Pinterest * LinkedIn * Tumblr Breadcrumb Trail Links SCOTIABANK CEO SHIFTS FOCUS TO NORTH AMERICA, VOWS 'SIGNIFICANT' CHANGE IN MINDSET Scott Thomson to reallocate capital from developing markets to developed ones Get the latest from Barbara Shecter straight to your inbox Sign Up Author of the article: Barbara Shecter Published Dec 13, 2023 • Last updated 2 days ago • 4 minute read Join the conversation Bank of Nova Scotia will reallocate capital from developing markets to developed ones, prioritizing Canada, the United States and Mexico, in an effort to bolster profitability. Photo by Cole Burston/Bloomberg ARTICLE CONTENT The Bank of Nova Scotia will reallocate capital from developing markets to developed ones, prioritizing Canada, the United States and Mexico in that order, as it seeks to bolster profitability and shareholder returns, chief executive Scott Thomson said Dec. 13 as he unveiled a much-anticipated strategic update. We apologize, but this video has failed to load. Try refreshing your browser, or tap here to see other videos from our team. SCOTIABANK CEO SHIFTS FOCUS TO NORTH AMERICA, VOWS 'SIGNIFICANT' CHANGE IN MINDSET BACK TO VIDEO We apologize, but this video has failed to load. Try refreshing your browser, or tap here to see other videos from our team. Play Video Thomson, who was plucked from the boardroom rather than the bank’s executive ranks in late 2022, promised investors “a significant change in mindset” at Scotia, which has underperformed peers over the past 10 years. Advertisement 2 Story continues below Trending 1. 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Activate your Online Access Now Article content Article content That will include a renewed emphasis on its home market and North America more broadly, as it backs away from an international strategy that has not lived up to expectations. “Although work has been done to reposition the bank, it is important to acknowledge that we have lagged our peers in financial metrics that are key drivers of shareholder (value) creation,” Thomson said in his first presentation as CEO at Scotia’s annual investor day. “The returns on our capital deployed have not measured up in the last 10 years and, as a result, Scotiabank’s total shareholder return has underperformed peers.” While Scotia is a top five bank in Mexico, Thomson said the $7 billion it has spent on acquisitions to build scale in markets including Chile, Peru and Colombia “have not yet met … return expectations.” As a result, efforts are underway to improve international results and make them less volatile, with the goal of turning around those businesses through efficiency initiatives rather than allocating further capital. “While this is a long-term strategy, and the best outcomes for these businesses would be to improve profitability and cost efficiency, if we are not able to achieve appropriate risk-adjusted returns in these businesses then we will be prepared to redeploy capital to other businesses in relatively short order,” Thomson said. Advertisement 3 Story continues below Article content Colombia has proven to be a challenging market for Scotia and the bank is conducting a sales process for a consumer finance business in Peru, Thomson said. But sales in the “turnaround” regions are not the aim. “There’s not an objective here to sell Peru or to sell Chile,” he said during a briefing with media. “We just want to run those businesses better.” At the same time, Scotia intends to “materially” increase investment in its North American business including corporate banking and wealth management to drive profitable growth. The priority will be to get a bigger share of clients’ business across the bank by building relationships and streamlining digital processes, he said. Scotia already derives 10 per cent of its net income from the United States, largely through corporate and wholesale banking, Thomson said, adding that the bank is well-positioned to take advantage of clients with business dealings in Canada, the U.S. and Mexico. “Clients responsible for approximately 30 per cent of our Canadian business banking revenues have operations in the U.S. or Mexico,” he said, adding that 15 per cent of commercial clients in Mexico have operations north of the border. Advertisement 4 Story continues below Article content Thomson said the bank had been too focused in the past on volume, bringing in “monoline” clients that don’t do much at the bank beyond a mortgage, bank account, or auto loan. Going forward across all its geographies, including Canada, Scotia will concentrate on increasing its share of profitable clients, he said. Thomson’s rise to CEO of Scotia was unusual as he is not a veteran banker. He was recruited from the bank’s board of directors, which he joined in 2016, skipping over senior executives who might otherwise have gotten the job. He was a vice-president at investment bank Goldman Sachs Group Inc. early in his career and has senior executive experience including stints as CEO of Finning International Inc., the world’s largest dealer of Caterpillar equipment and engines, and chief financial officer of Talisman Energy Inc. Scotia’s board clearly wanted to shake up the bank, whose shares had underperformed competitors. Under former CEO Brian Porter, Scotia slipped a notch to fourth spot from the middle of the pack among the big five Canadian banks, as measured by market capitalization. Advertisement 5 Story continues below Article content Among Canada’s handful of large banks, Scotia has long stood out. For one thing, a strategic decision was made years ago to pursue sprawling international growth rather than try to compete in the United States, as other Canadian lenders such as Bank of Montreal and Toronto-Dominion Bank were doing through the large-scale acquisition and consolidation of retail banking operations. Scotia was also the lone member of the Big Five banks to argue against the need for domestic megamergers in the late 1990s. Related Stories 1. Are Canada’s big banks just playing it safe? 2. Banks face more credit losses amid mortgage renewal crunch 3. Why Bay Street and Wall Street financial giants are slashing jobs But the strategic decisions have not come without costs. As Royal Bank of Canada, Bank of Montreal and TD continue to build on solid U.S. franchises and venture into lucrative private banking there, Scotia has already pulled back from several international geographies in recent years, citing risks, complex regulatory requirements and the high technology costs needed to deal with issues including money laundering. With operations spread across numerous far-flung geographies, there have also been concerns about “trapped capital” resulting from certain regulators requiring funds to be held in the country in which they are generated. This can impact returns and hamper efficient deployment of capital. Advertisement 6 Story continues below Article content Even before Thomson took over, a stated intention of Scotia’s pullback from international markets was to focus on a narrow group known as the Pacific Alliance, consisting of Mexico, Chile, Peru and Colombia. “We have exited approximately 25 higher risk geographies,” Thomson said during his presentation. At its height in 2013, Scotia operated in 54 countries and territories, according to a Bloomberg News report in 2019. • Email: bshecter@postmedia.com -------------------------------------------------------------------------------- Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here. Article content Share this article in your social network * * * * * Share this Story : Scotiabank CEO shifts focus to North America, vows 'significant' change in mindset * Copy Link * Email * Facebook * X * Reddit * Pinterest * LinkedIn * Tumblr Comments You must be logged in to join the discussion or read more comments. Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings. Loading... 0 Read Next 1. 2. 3. 4. 5. 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