Tuesday, September 12, 2006

Scotiabank Seeking Asian, Thai Investments

Financial Post, 13 September 2006

Two of Canada's biggest banks vied for Asian supremacy yesterday, at least in terms of announcements about who is the most ambitious in the region. Executives from capital-rich Bank of Nova Scotia and Bank of Montreal each touted plans for growth in Asian countries, specifically China and Thailand. Scotiabank, for instance, announced it has obtained approval from Chinese regulators to open a bank branch in Shanghai, which will serve local and international companies with foreign currency lending and deposit-taking services. "The Shanghai branch will allow Scotiabank to provide on the ground support of our clients as they expand in the eastern region of China," said Michele Kwok, Scotiabank's senior vice-president for Asia-Pacific and the Middle East. Also, Scotiabank chief executive Rick Waugh was said to have told reporters in Thailand that the bank is interested in expanding its presence there, too. "We have been in Thailand for over 25 years and we're always looking for opportunities," Mr. Waugh was reported to have said as he left a meeting with the Thai Finance Minister. He is in the region ahead of the International Monetary Fund meeting in Singapore next week. Meanwhile, Bank of Montreal CEO Tony Comper outlined his bank's strategy in China during a conference in Toronto. "Our modest investments do not yet make a significant contribution to our bottom line and quite frankly, they're unlikely to have a material impact on returns for a number of years to come," Mr. Comper said. "Nonetheless, we believe that we're exceptionally well-positioned to take advantage of China's enormous growth."
Bloomberg, Laurent Malespine, 12 September 2006

Bank of Nova Scotia, Canada's third-largest bank by assets, is looking for investment opportunities in Thailand and other parts of Asia, Chief Executive Officer Richard Waugh said.

Waugh, who spoke after meeting Thailand's Finance Minister Thanong Bidaya in Bangkok today, declined to comment on any specific targets.

"We have been in Thailand for over 25 years and we're always looking for opportunities," Waugh told reporters as he left the meeting. "We are always looking for opportunities in Asia and in Thailand."

Bank of Nova Scotia has spent more than $1 billion since 2000 to buy banks, primarily in Latin America, to offset slower growth in Canada. The Toronto-based bank's profit for the quarter ended July 31 rose 19 percent from a year earlier to C$936 million ($842 million), climbing for the 13th straight quarter to a record, boosted by earnings from Latin America.

The Canadian lender is "seriously" looking at additional acquisitions in international markets, Waugh, 58, said on Aug. 29 during a conference call with investors. He didn't elaborate.

The bank's revenue climbed 11 percent to C$2.99 billion in the three months to July 31, it said on Aug. 29. Profit from international banking rose 22 percent, led by Mexico, Peru and Central America. The bank expects to generate more than a quarter of its net income from outside Canada this year, compared with 19 percent in 2000.

In March this year, Nova Scotia purchased two banks in Peru for C$390 million in March, making Scotiabank the third-largest bank in that country. Scotiabank also agreed in June to buy Corporacion Interfin SA, the owner of Costa Rica's largest private bank, for about C$330 million.

Bank of Nova Scotia has since at least 1999 been cited as a potential investor in a Thai bank. In October 1999, The Nation and other Thai newspapers said it was one of the bidders for Siam City Bank Pcl, a lender seized by authorities in the wake of the 1997 financial crisis. Siam City Bank is still controlled by the government.

In 2004, Bank of Nova Scotia was mentioned in Thai media reports, including The Nation newspaper, as a potential bidder for Bank of Asia Pcl, then a Thai unit of ABN Amro Holding NV. United Overseas Bank Ltd., Singapore's No. 2 lender, ended up buying the Thai lender.

In January this year, Bank of Nova Scotia was again mentioned as a potential buyer of a stake in Bank of Ayudhya Pcl, Thailand's sixth-largest lender. General Electric Co.'s Asian consumer finance unit last month agreed to pay 22 billion baht ($584 million) for 25.4 percent of the Thai bank.

BankThai Pcl, a Thai commercial lender controlled by the central bank, said last month it's in talks to sell a stake to TPG Newbridge to raise as much as 7 billion baht to expand lending.