Scotiabank shifts focus to North America in strategy makeover

financialpost.com:

Bank of Nova Scotia plans to go after a larger share of customers’ wallets as it refocuses its business on North America, shifting capital away from operations in Latin America that have delivered poor returns.

Scotiabank has established a new transformation office to deliver on strategic priorities that include better productivity and moving away from a volume-based approach to customer acquisition in favour of one aimed squarely at profit, chief executive Scott Thomson said during an investor day Wednesday.

“There are clear realities that have impacted our relative performance,” he told a room of about a hundred investors and analysts at the lender’s headquarters in Toronto. “First and foremost, we are behind in winning primary relationships, with approximately 16 per cent of clients using Scotiabank for their day-to-day banking needs.”

Thomson, who became CEO in February and has spent the months since then formulating the fresh approach and recruiting new leaders for key divisions, outlined why he believes Scotiabank has lagged behind its peers on shareholder returns over the past decade.

In Canada, the bank’s loan-to-deposit ratio is too high, meaning it has to rely on costlier wholesale funding, he said. Meanwhile, the lender has less market share than its rivals in most product lines, other than mortgages and auto loans, and it has fewer deposits and clients per branch.

The company is the Canadian bank with the largest international footprint, but businesses in Latin America — particularly Peru, Chile and Colombia — have too many clients with only one banking product, Thomson said, and its capital-markets business there is flagging due to relatively lower fee pools in the region.

The bank will now allocate 90 per