Scotiabank could exit some foreign markets

Scotiabank will focus its growth efforts closer to home and could exit some foreign markets under a new strategic plan outlined by chief executive Scott Thomson on Wednesday.Thomson said the bank will direct about 90% of incremental capital to its Canadian, U.S. and Mexico markets, while spending in its Latin American markets will face increased scrutiny.”We are accelerating growth in our Canadian franchise, and allocating capital increasingly towards stable, high-return markets in North America,” he said during an investor presentation.The bank will be selective on funding to its Chile and Peru personal and commercial businesses, while its Colombia and Central America divisions will either need to turn around without more funding or the bank will look to exit the markets.”They’ve got a plan, they’re executing on that plan, but we will determine whether to continue on that plan or redeploy capital in relatively short order,” Thomson said.The potential pullback on less profitable markets is part of a longer-term trend at the bank, which has already left 25 higher risk regions over the past decade.Scotiabank has underperformed its peers for years on shareholder returns along with indicators like revenue growth and return on equity.The bank has focused too much on volume, adding client numbers and business without enough focus on the returns of that growth, Thomson said.”It’s a fundamentally different philosophy on how to create value for shareholders. And my view is we’re going to create that through value, profitable growth, there will be volume growth, but it’ll be value as opposed to a focus on driving volume through balance sheet.”To drive increased value, he said the bank will work harder to build more “primary relationships” where customers use Scotiabank for day-to-day banking and other products.The bank is also pushing on efficiencies across its operations. It announced last quarter it was cutting about three per cent of its workforce and took a $354-million charge related to the move. It also took an $87-million charge related to reducing its real estate footprint.Thomson said the bank, which has already confirmed some branch closures, lags its peers on deposits and clients per branch.The updated plan is the result of a review Thomson launched as part of coming on as CEO of the bank in February.

Ian Bickis, Canadian Press

Ian Bickis is a reporter with The Canadian Press, a national news agency headquartered in Toronto and founded in 1917.