Monday, March 26, 2007

Scotiabank Seeks Bigger Slice of Mutual Fund Pie

The Globe and Mail, Keith Damsell, 26 March 2007

Bank of Nova Scotia wants a bigger piece of Canada's mutual fund pie.

"We are turning the corner. Improving mutual fund sales is a key priority," Barbara Mason, executive vice-president of wealth management at Canada's third-largest bank, told a Montreal investment conference last week.

Scotiabank wants fund sales from its branches to double this year from a year ago. The bank opened 15 branches last year and another 35 are slated for 2007. A key target is the $50-billion in mutual fund assets held by the bank's clients that are managed by somebody else, she said.

"We have recognized that we have a long way to go but we are very focused on delivering a turnaround performance," Ms. Mason said.

Scotiabank has been an also-ran among the big banks when it comes to mutual funds. As of Feb. 28, the bank oversaw $17-billion in funds, the smallest share of the big five banks and a fraction of the $74.6-billion in fund assets managed by Royal Bank of Canada.

"We have not, I think, delivered . . . the extensive capabilities to move to the next level," Ms. Mason said.

Ms. Mason took over the strategic direction of the bank's fund business following the December departure of Karen Fisher, the president and chief executive officer of Scotia Securities Inc. Ms. Fisher had overseen the bank's mutual fund operations since 2000. Under her tenure, in-house funds generated little excitement and third-party offerings dominated sales.

Building up a seasoned sales and advice team is key to Ms. Mason's growth plans. The bank plans to add 100 investment executives to its team of 900 by the end of this year. The retail sales and service team increased by 700 in 2006 and another 200 will be hired in 2007.

Her efforts are starting to pay off. The bank recorded more than $1-billion in net sales for the four-month period ended Feb. 28 compared with net redemptions during the same period in fiscal 2006. Wealth management revenue is expected to grow 10 per cent this year.

A strategic acquisition in the fund business is high on the priority list but the right deal remains elusive, she said. The bank's criteria is "quite specific," including business synergies and cultural issues.

"The deal that we do here, the large one, is extremely strategic and therefore absolutely has to be the right one. We have looked at a number of sizable opportunities and have chosen not to participate for a variety of reasons," Ms. Mason said.