Scotiabank to Focus on Integrating Foreign Takeovers

Bank of Nova Scotia (BNS), which made more than 20 foreign acquisitions in the past five years, will now focus on integrating the new businesses, said Dieter Jentsch, group head of international banking.

“Not that there won’t be acquisitions, but certainly our focus will predominantly be on organic growth,” Jentsch said in an interview in Halifax, Nova Scotia, where Scotiabank is holding its 181st annual meeting today.

Scotiabank, which operates in 55 countries, generates a quarter of its consumer-banking profit from outside Canada. Last year, the international banking unit had net income of C$1.73 billion ($1.7 billion) and about C$7.2 billion in assets.

“We’re now at a capital-buildout phase of our bank,” said Jentsch, who took over the international post in November from President Brian Porter. “With our acquisitions, it’s important for us to fully integrate these platforms, get them to work the way you want them to work.”

Integrating acquisitions can take two to four years depending on the region and includes aligning company policies, procedures and the products Scotiabank offers to clients, said Jentsch, who was previously the bank’s executive vice president in Latin America.

Canada’s third-largest bank will still consider “tuck-in” acquisitions to add to where the bank already has operations, particularly in Latin America, said Jentsch, declining to say how much the bank would spend. The Toronto-based lender will also look at larger deals, “but we’re not aggressively seeking those,” he said.

Brazil

Scotiabank has been increasing its market share in countries including Peru, Chile and Mexico, where it offers small loans to the “under-banked” population. Scotiabank is unlikely to make acquisitions in Brazil, Jentsch said.

“For us to buy something that would be meaningful in terms of our personal and commercial platform, it would be almost too big for us to swallow,” Jentsch said. “And quite frankly, there’s nothing for sale.”

Jentsch, who travels between 2 1/2 weeks and 3 weeks a month, reiterated that the bank doesn’t have a “strategic focus” on acquiring a U.S. consumer bank.

In Asia, where Scotiabank operates in countries such as Thailand, the bank is looking at “continued growth in our wholesale and our commercial-banking opportunities.”

Scotiabank is still awaiting regulatory approval from China to close its C$719 million purchase of Bank of Guangzhou, announced in September 2011. Jentsch said he expects a decision on the deal by year-end and will be traveling to Asia this month.

Profit Growth

“It’s a long process,” Jentsch said. “Patience is a requisite in doing business there, and we have no new information to add.”

At the annual meeting, Scotiabank Chief Financial Officer Sean McGuckin reiterated that the bank expects to have 5 percent to 10 percent profit growth this year.

Scotiabank rose 1.2 percent to C$57.73 at 10:48 a.m. in trading on the Toronto Stock Exchange.

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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