Bloomberg News

Scotiabank Sees Slower Pace for Foreign Takeovers

November 01, 2012

Bank of Nova Scotia expects the pace of foreign acquisitions to slow after Canada’s third-largest bank spent more than C$3 billion ($3 billion) in the past five years buying lenders abroad, new president Brian Porter said.

“We’re really going to be focused on organic growth to drive opportunities,” Porter, 54, said yesterday in a telephone interview. “We will continue to look at M&A opportunities on a selective basis.”

Porter, who has been with the Toronto-based bank since 1981, was appointed president yesterday, possibly paving the way for him to replace Richard Waugh as chief executive officer.

Waugh, who turns 65 on Dec. 23, relinquishes the president title today and remains CEO, a position he has held for almost nine years. He said in a television interview in September that his retirement isn’t “imminent.”

Porter declined to say whether he’s in line for the top spot.

“I’m very excited to work with Rick and Sabi (Marwah) and the whole management team and serve our stakeholders,” Porter said. Marwah is vice chairman and chief operating officer.

Scotiabank, which operates in 55 countries including Thailand, Chile and Colombia, receives about a quarter of its consumer banking profit from outside Canada. Last year, the international banking unit had net income of C$1.49 billion.

The bank will continue to target the “unbanked population” in countries including Mexico and Peru, as well as financing for customers with little or no credit history, Porter said.

“We would look at parts of the Caribbean, the Dominican Republic, and really through Latin America,” Porter said.

Succession

Before being appointed to lead the international banking business in 2010, Porter was chief risk officer.

“He’s led the international division, which has had strong success for Scotia,” said Jeffrey Bradacs, a portfolio manager with Manulife Asset Management Ltd. in Toronto, who runs about C$1.5 billion in assets. “Overall the market views it as positive and a step for the next transition to CEO.”

Under Porter, Scotiabank oversaw acquisitions in Mexico and Colombia. The bank is still awaiting regulatory approval from China to close its C$719 million purchase of Bank of Guangzhou, announced in September 2011. Porter, who was in China two weeks ago to talk with regulators, said he doesn’t know when the deal will close.

The bank’s four main business lines -- Canadian banking, international banking, wealth management and global banking and markets -- will report directly to Porter.

“Using past succession patterns at Scotia as a guide, Mr. Porter also appears set to become CEO when Mr. Waugh steps down,” Desjardins analyst Michael Goldberg said yesterday in note to clients. Waugh became president of Scotiabank in January 2003 and succeeded Peter Godsoe as CEO in December that year.

Top Spot

Dieter Jentsch, executive vice president for Latin America, will succeed Porter in the international role, the bank said.

Bank of Nova Scotia (BNS) has risen 6.7 percent this year, the third-best performer among Canada’s six biggest banks.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net


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