Scotiabank to Focus on Internal Growth, Costs, CEO Says

Bank of Nova Scotia, Canada’s third-largest lender, will emphasize internal growth and managing expenses over pursuing acquisitions, according to Chief Executive Officer Brian Porter.

“We’re focusing right now on organic growth; that’s not to say we’re not doing acquisitions,” Porter, 55, said today in an interview at the bank’s Toronto headquarters. “We’re always looking on acquisitions that make sense, whether it’s in Latin America or whether it’s in Asia.”

Scotiabank made about C$13 billion ($12.2 billion) of acquisitions since the financial crisis. They include last year’s $1 billion purchase of a 51 percent stake in Colombia’s Banco Colpatria Red Multibanca Colpatria SA, its largest acquisition abroad, and the C$3.1 billion takeover of ING Groep NV’s Canadian operations in November 2012.

“The bank has a history of being opportunistic,” said Porter, who took over as CEO on Nov. 1. “Buying is the easy part. Getting it up and running properly and at the Scotiabank standard is what we strive to do.”

Scotiabank has expressed interest in Wing Hang Bank Ltd. (302), Hong Kong’s second-largest family-run lender, as well as Chile’s Corpbanca (CORPBANC), people familiar with the matter have said.

Chile’s Corpbanca

Porter declined to comment on whether Scotiabank, which has operations in more than 55 countries, is in talks with Wing Hang or is interested in Santiago-based Corpbanca. The Chilean lender said in a statement to the country’s securities regulator that it’s in discussions with other banks to merge its operations domestically and abroad.

Itau Unibanco Holding SA (ITUB4), Brazil’s biggest bank by market value, is in talks to buy a majority stake of Corpbanca, the Sao Paulo-based lender said yesterday. Billionaire Alvaro Saieh and his family control 76 percent of Corpbanca, Chile’s fifth-biggest lender by assets, according to the most recent annual report.

“We don’t really like auctions,” Porter said. “Most of the acquisitions that we’ve done are formed through long-term relationships. We look for partners that have the same values, pretty similar culture, that we think we can partner with over the long term.”

‘Biggest Bang’

Porter said that while Chile is a “country of focus” for Scotiabank, banks in that nation reach a higher proportion of customers than in Latin American countries such as Peru and Colombia, where the company also has operations.

“Chile is really a developed economy, for all intents and purposes, the others are not,” Porter said. “So you’ve got to get the picture right: Where is your biggest bang for the buck as an investor for the long term?”

Scotiabank owns a minority stake in Bank of Xi’an, a lender in northwestern China. The Canadian firm withdrew its bid to buy a 20 percent stake in Bank of Guangzhou in July after its Chinese partners re-evaluated the proposed partnership.

Scotiabank is focusing on expenses, including reviewing back-office operations such as mortgage processing in Canada and merging some call centers in its international banking business, Porter said.

‘Faster, Cheaper’

“We’re looking at structural costs within our business,” Porter said. “We’re just looking at ways to run the business better, more efficiently, faster, cheaper.”

Porter succeeded Richard Waugh, 65, who retired after almost 10 years as CEO. Porter oversaw Scotiabank’s international banking business from 2010 to 2012, and previously was group head of risk and treasury, as well as chief risk officer.

Scotiabank’s profit for the fiscal year ended Oct. 31 rose 3.6 percent to a record C$6.7 billion from a year earlier, according to Dec. 6 financial statements. A 19 percent jump in earnings from Canadian banking, aided by contributions from the ING Direct takeover, helped lift results. Scotiabank earned 29 percent of its profit from international banking in the period.

Scotiabank fell 22 cents to close at C$62.96 in Toronto trading, paring this year’s gain to 9.6 percent.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Peter Eichenbaum at peichenbaum@bloomberg.net

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