Monday, March 24, 2008

Scotiabank's International Wealth Management Business

The Globe and Mail, Tara Perkins, 24 March 2008

While much attention has been paid to Bank of Nova Scotia's Canadian wealth-management business lately because of its bid for DundeeWealth Inc., the bank is quietly working to build an international wealth-management business that it hopes will match the domestic one in size within a decade.

Wealth management incorporates things like mutual funds, brokerage businesses and private banking; players in the market here are binging on a frenzy of growth as baby boomers near retirement.

Different factors are at work in many southern countries that Scotiabank eyes, where populations are relatively young but, in many cases, the middle class is establishing wealth for the first time, and mutual fund industries are just getting off the ground.

About a year and a half ago, Scotiabank made the decision to develop a wealth-management business internationally.

As Canada's most far-flung bank has been bulking up its consumer and business banking network, it has made a number of acquisitions in the Caribbean and Latin America, "and if they came with wealth-management pieces of the business, we maintained those, but there was really no overarching strategy," Dan Wright, who heads the bank's efforts, said in an interview. "So that's when I came in."

Last year, the bank began opening Scotia Private Client Group offices outside of Canada, and now has four in locations such as the Dominican Republic and the Bahamas. It plans to have 14 offices by year-end, stretching to locations ranging from Trinidad to Costa Rica to Chile, where it is lusting after business from high-net-worth and ultrahigh-net-worth customers.

Scotiabank is increasing by one-third the number of adviser-brokers it has in its international wealth-management business, and is working on mutual fund businesses in some countries, such as El Salvador, where the concept is relatively new and regulations are still in development.

"There's certainly a new emphasis and focus on actually saving for their future, or saving for their retirement," Mr. Wright said.

"So, if you look at a country like Chile for example, that is probably most developed in terms of retirement savings and pension legislation, they recognized very early that there was a need to create a way for individuals to save for their future instead of just relying on the government to fund that future, and most of the other Latin American countries are now moving in the same direction."

As Scotiabank presses ahead in the southern regions where the bulk of its international consumer banking business is based, it's also cooking up a plan to build a wealth-management business in Asia.

"We're not ignoring Asia," Mr. Wright said. In fact, he's made a couple of trips to that region in recent months, and the bank has decided to build its strategy for the area within the next eight weeks.

Scotiabank made its first major foray into consumer banking in Asia last year, with the purchase of a 24.99-per-cent stake in Thanachart Bank, Thailand's eighth largest bank. As the bank builds on that consumer banking base, it will also forge into wealth management.

Meanwhile, Mr. Wright, who spends much of his time on the road, is watching for acquisition opportunities to speed along the bank's international wealth business. "The world is my oyster. I'm always looking, and quite frankly not a week goes by there isn't an opportunity that lands on my desk."

Scotiabank is not the only Canadian institution eyeing the global wealth management market. Last year, Royal Bank of Canada changed how its business lines are arranged to promote aggressive growth of wealth management abroad.