Thursday, September 25, 2008

Scotiabank has Renewed Talks with Bank of Dalian

Bloomberg, Zhang Dingmin and Sean B. Pasternak, 25 September 2008

Bank of Nova Scotia, Canada's third largest by assets, may buy minority stakes in China's city commercial banks as it expands in emerging markets, Chief Executive Officer Richard Waugh said.

Scotiabank has renewed talks with Bank of Dalian Co., a lender in northeast China with 90 branches, Waugh said today at Peking University in Beijing.

Scotiabank, based in Toronto, has operations in about 50 countries, including China, Mexico and Peru, and gets about one- third of its profit from outside Canada. The lender reported a third straight quarterly profit decline last month because of higher bad-loan provisions.

``The opportunities are still in the developing and emerging economies,'' said Waugh. ``The U.S. is obviously a great market, but the opportunities for us are elsewhere.''

Waugh, 60, has said he will continue to look for acquisitions abroad. It's unlikely the company would buy a U.S. consumer bank, the chief has said.

Scotiabank entered a bidding process to buy Cleveland-based National City Corp., the Wall Street Journal reported in April. The Canadian lender hasn't confirmed the report.
Dow Jones Newswires, 25 September 2008

Bank of Nova Scotia will eschew large acquisitions in the short term amid an uncertain outlook for the global financial system, a top executive said.

"You won't see Scotiabank taking aggressive action on acquisitions and doing very sizable moves in the short term," said Stephen McDonald, co-chairman and co-chief executive officer of Scotia Capital and head of global corporate and investment banking, at a press conference Thursday in Mexico City.

Scotiabank, Canada's most international bank with operations in 50 countries, has been an active buyer in recent years, especially in Latin America where it has built up a sizable commercial-banking franchise across the region.

The group's most recent deal was the acquisition of the Canadian operations of E-Trade Financial Corp. earlier this week for $442 million.

In Latin America, Scotiabank's purchases include Chile's No.7 bank, Banco de Desarrollo, for $1.02 billion last year, $293.5 million for Costa Rican bank Interfin, $330 million to acquire and merge two Peruvian banks in 2006 and $178 million for El Salvador's No. 4 bank, Banco de Comercio, in 2005.

"We are quite methodical about how we go about executing our plans," McDonald said. "We won't likely be seen as 'opportunistic.' We are going to be more disciplined."

Commenting on his outlook for the global financial system, McDonald sees a painful period of deleveraging ahead as financial institutions trim their debt levels and restrict lending.

"Access to credit is a very important thing," he said. " "It affects pricing of all asset classes. I think it's a genuine worry what happens when leverage levels come down."

McDonald described the actions being taken in the U.S., where the federal government has proposed a $700 billion rescue package for the banking industry, as "prudent" following last week's events.

"I think we were in very dire shape [in terms of] global financial-market conditions last week where we didn't have commercial paper for high-quality issuers rolling over," he said. "The whole [commercial-paper market] was coming quickly to a stop and something massive had to be done," he said.