4 Min Read
TORONTO (Reuters) - Bank of Nova Scotia's (BNS.TO) new chief executive, Brian Porter, said the lender will not follow the lead of competitors that have sought to expand their retail banks through U.S. acquisitions, but will instead push to grow within its current Canadian, Latin American and Asian footprints.
"Are we going to make a (U.S.) acquisition on the retail side? The answer's 'no'," he told Reuters in an interview on Thursday.
Porter, who became CEO of Canada's third-largest bank in November, also said the bank was unlikely to buy back shares as its Canadian peers have done over the past year, and said Scotiabank might expand its online banking platform - acquired last year - into international markets.
The resistance to entering the United States on a retail basis - Scotiabank does have a modest U.S. capital markets and commodities business - comes as rivals Toronto-Dominion Bank (TD.TO) and Bank of Montreal BMO.TO have built sizable branch networks there.
Royal Bank of Canada RY.TO is one of the larger capital markets players in the U.S., and Royal and Canadian Imperial Bank of Commerce CM.TO have a wealth management presence in the country.
But Scotiabank has embraced a more far-flung presence, active in more than 50 countries with a strategy geared to holding only a small part of each market, so as not to get stung if a country runs into trouble.
And while emerging markets growth has slowed this year, Scotiabank still sees the sector as preferable to a U.S.-focused strategy.
"Even as these economies have slowed down in Latin America, the countries are still going to grow at 3.5-5.5 percent this year, which is better than the developed world," Porter said.
Scotiabank is betting those higher growth rates will help the bank endure a sluggish period in the Canadian bank sector, as domestic loan growth has been hit by a cooling housing market, and volatile markets have led to choppy wholesale banking results.
The bank has built up its presence through acquisitions, but is now more focused on expanding its offerings within each international market, Porter said. A push into new countries is unlikely, but purchases within its existing footprints are a possibility.
"We've been acquisitive by nature, so opportunities are going to come up from time to time," he said.
Porter, 55, is intimately familiar with the bank's international operations, as he ran the international division before he took over from former CEO Rick Waugh in November.
That international presence could grow to include Scotiabank's online bank, which Scotiabank acquired from Dutch lender ING Groep ING.AS last year and recently branded as "Tangerine."
The online bank offers high-interest savings accounts and low-cost loans in Canada, but the bank plans to expand that into credit cards, and Porter said international expansion could happen at some point.
"We think the model has applications in other countries," he said.
Within Canada, where retail banking market share is dominated by Canada's five biggest banks, Scotiabank plans to build its wealth management presence, as well as its cards and payments business.
But he said Scotiabank would be unlikely to follow the lead of its rivals, who have bought back shares over the past year to prop up their stocks during a challenging growth period. Porter said Scotiabank would only consider such a move if it couldn't find ways to use that capital for growth.
"In some regards I would view share buybacks, depending on the company and strategy, (as) an admission of a failed strategy," he said.
Reporting by Cameron French; Editing by Peter Galloway and Phil Berlowitz