Follow James Bradshaw on Twitter: @jembradshawOpens in a new window. Three months later, Mr. Thomson himself was announced as the banks next chief executive officer. The CEO said the strategy is aimed at improving investor returns and growing customer portfolios. All Rights Reserved. Royal Bank of Canada and National Bank of Canada are set to announce results on Wednesday, followed by Toronto-Dominion Bank on Thursday. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Francisco is a seasoned transformational leader with a proven track record of delivering results, leading multiple business segments for major financial services organizations across global markets, including Latin America, Mr. Thomson said. Only time will tell whether they made the right decision or not.. It is rare for Canadian banks to reach outside their own executive ranks to choose CEOs, partly because of the financial and regulatory complexity of running these massive companies. James Bradshaw Institutional Investing Reporter. This year, the share price is down nearly 25 per cent, making it the worst performer among the biggest six Canadian banks. Copyright 2023 Morningstar. The recruitment decision marks a changing of the guard as one of previous CEO Brian Porters chief lieutenants departs the bank, according to Barclays analyst John Aiken. However, some experts and senior industry sources say it will be difficult to hit his stride so quickly. Even people Mr. Porter was once close with, at least professionally, such as Adam Waterous, left the bank. A third deal in retail banking, worth $2.9-billion, was for a majority stake in BBVA Chile. He told me about a month ago that it looked like Scotiabank might make him an offer, and would we be willing to adjust his departure date a little bit. But whats transpired at Scotiabank is something else. Yet once again Scotiabanks directors seem pretty tone-deaf to cultural matters. Subscribe to globeandmail.com for unlimited access to Canada's leading independent journalism. He also lowered his recommendation to sector perform from outperform.. But the beaten-up share price and low valuation are hard to ignore. This article was published more than 6 months ago. The new CEO has stepped into the banks top job at a time of turmoil in the banking sector. But Scotiabank in 2021 generated 18 per cent of its profit from the Pacific Alliance countries of Mexico, Peru, Chile and Colombia. Box 4100 Station A Toronto, ON M5W 1T1: ScotiaCard Customer Service P.O. The Globe and Mail - Mon Jun 26, 10:06AM CDT. But even as the bank looks at shifting its capital allocation strategy, Mr. Viswanathan said Scotiabank is first looking at how it can grow organically rather than leaving certain businesses. During the tumultuous month that began with Silicon Valley Banks failure, Canadas highly diversified banks avoided the runs on deposits seen in the U.S., but the shockwaves that rippled across global markets did not go unnoticed by Ottawa. Its a stretch, but fine, board chair Aaron Regent can have that one. A premium report that provides detailed quantitative assessments of earnings, fundamentals, relative valuation, risk, price momentum and more. Scotiabanks investigation found that some employees inappropriately processed clients requests to switch their mutual fund holdings. HSBC and Scotiabank are the latest Wall Street companies to face penalties for employees use of personal devices and messaging apps since regulators launched a broad probe into the use of such platforms in 2021. I think he has an uphill climb to get to the point where he can perform the job effectively.. Scotiabank targeted cash-back offer to switch to fixed-rate mortgage stokes internet maelstrom Erica Alini Published December 11, 2022 Updated December 13, 2022 Scott Thomson stepped into his first round of financial earnings on Tuesday with a reassurance to investors that he plans to increase Bank of Nova Scotias BNS-T deposit base to build a source of lower-cost funding for lending, as narrowing net interest margins outweighed gains in its international banking business. Profit in the global banking and markets division was $519-million, a 7-per-cent decrease from the same quarter last year as higher costs and provisions for credit losses offset higher net interest income. Gurbir Grewal, the director of the SECs enforcement division, told a legal conference in Denver Thursday morning that the Scotiabank action is an example of one of the SECs current enforcement priorities. Further strengthening this connectivity will be a focus for us., Domestically, he expects to grow Scotiabanks presence in British Columbia and Quebec, markets in which he said the bank is underpenetrated.. In an interview with The Globe and Mail ahead of the meeting, Mr. Dodig said that while two-thirds of Canadas gross domestic product growth is generated by population increases, the country needs to catch up on building the infrastructure needed to support hundreds of thousands of newcomers each year, as well as the Canadians already building their lives here. Copyright 2023 The Globe and Mail Inc. All rights reserved. The banks involved were Barclays Capital Inc.; BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.; Goldman Sachs & Co. LLC; Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC; UBS Securities LLC together with UBS Financial Services Inc.; Jefferies LLC; and Nomura Securities International, Inc. and Cantor Fitzgerald & Co. Follow David Berman on Twitter: @dberman_ROBOpens in a new window. Scotiabank names Finning chief Scott Thomson as next CEO, Brian Porter retiring in January. The decline was serious enough for Mr. Mihelic to trim his target price on the stock or where he expects the share price to be within the next 12 months to $83, from $94 previously. Welcome to. Scotiabank says Porter will retire at the end of January next year. Bank of Nova Scotia has a more specific challenge with its exposure: While rising interest rates are supposed to add a significant tailwind to a banks loan profitability, Scotiabank has seen its international net interest margins which compares interest it is making on loans to payments it is making on deposits decline slightly. In March, 2020, Canadian Imperial Bank of Commerces former head of research and coverage of Canadian banks, Rob Sedran, was appointed as senior vice-president for enterprise strategy, planning and corporate development. CNW Group. Copyright 2023 The Globe and Mail Inc. All rights reserved. Scotiabank says Porter will retire at the end of January next year.Jeff McIntosh/The Canadian Press. In August, 2018, two clients submitted complaints to the bank that the preauthorized contribution plans had been set up without their knowledge, prompting Scotiabank to launch an investigation. Diluted earnings per share ("EPS") were $1.69, compared to $2.16 in the same period a year ago. ul is now ranked among the top 25 undervalued stocks included in the S&P/TSX Composite Index. Nine years in, the board has finally decided its time for some fresh blood. Sign up today . Canada took in a record number of immigrants last year to compensate for slowing population growth and gaps in the labour market. As for Latin America, the region was hit hard by COVID-19, and some recent regime changes have investors worried about its banking climate. That is the stocks lowest valuation in 15 years and well below its average P/E of 11 over this period. The Globe and Mail offers the most authoritative news in Canada, featuring national and international news Mr. Webster built Scotiabanks mortgage business after the lenders 2006 purchase of Canadian mortgage business Maple Trust Company, where he was CEO. The Globe and Mail - Mon Jun 26, 8:44AM CDT, A look at equities with price momentum in both directions, Scotiabank appoints new head of real estate and secured lending, The most oversold and overbought stocks on the TSX, Why this money manager thinks investors should get off the sidelines but still be defensive, Canadas banking regulator boosts capital buffer as debt levels, borrowing costs climb, Eight Canadian stocks with sustainable dividend yields above 6 per cent, Canadian housing affordability likely past the point of no return: RBC analyst, Ahead of the summer doldrums, heres 18 Canadian stocks that offer safety and value, National Bank profit slides as economic gloom weighs on second-quarter earnings, Big bank earnings wrap up as results disappoint and interest rates, recessionary fears bite, Heres a breakdown of the Big Six banks second-quarter earnings, TD to miss profit targets on cancelled First Horizon deal, economic gloom, Thursdays analyst upgrades and downgrades. On average, the Big Six are down 14 per cent in 2022. In June, 2021, former National Bank of Canada analyst Peter Routledge became the head of Canadas banking regulator the Office of the Superintendent of Financial Institutions after stints as the head of the Canada Deposit Insurance Corp. and a senior adviser at the federal Finance Department. The decision to pass over top managers from within the bank in favour of the 52-year-old CEO who currently leads a major construction equipment dealer capped a highly unusual succession saga that has stunned Canadas corporate elite. Separately, the U.S. Commodity Futures Trading Commission said Scotiabank and Scotia Capital had agreed to pay US$15-million to it for related charges. He added that Mr. Aristeguieta brings impressive experience to the role as the bank looks to shake up its presence in its core international markets. Over the past six months, one of the hottest lunch topics on Bay Street was gossiping about which Scotiabank executive would succeed Mr. Porter: Canadian banking head Dan Rees, or global markets chief Jake Lawrence? What is this stock worth in intrinsic value? The bank also admitted that it failed to prevent employees from setting up preauthorized contribution plans which count toward sales goals without approval from clients. Scotiabank is developing substantial widespread process and governance enhancements to prevent contraventions similar to those addressed in the Settlement Agreement from occurring in the future and to ensure sufficient training, according to the settlement. Need help signing in? The clumsy board of directors. Follow Stefanie Marotta on Twitter: @StefanieMarottaOpens in a new window. For exchange delays and terms of use, please read disclaimer (will open in new tab). Its because through that relationship with the customer you get more intimacy, you understand how you can help them more and that allows you to provide more value., Scotiabank misses forecasts as profit falls on higher credit-loss provisions, weaker margins. Copyright 2023 The Globe and Mail Inc. All rights reserved. This large exposure has been a tough sell to investors who have witnessed the halting performance of emerging markets since BRICS Brazil, Russia, India, China and South Africa failed to live up to economic expectations in recent years. Copyright 2023 The Globe and Mail Inc. All rights reserved. In some cases, that was because of misgivings about whether Mr. Lawrence and Mr. Rees were seasoned enough to take over. It was the only one of Canada's Big Six bank stocks to trade lower at the end of the day. Because theres already been so much turnover, the last thing the banks investors and crucially, its employees wanted is more upheaval. We have not delivered the level of total shareholder return that our shareholders should expect of us, Mr. Thomson said during a conference call with analysts. Mr. Thomson declined an interview request from The Globe and Mail. The lenders stock has lagged those of rivals over the past decade. He highlighted growth opportunities in the banks business in Mexico, and in some Canadian markets. Follow us on Twitter: @ globeinvestor Opens in a new window Focus on deposits is so key, and its not just because of the cost of funding. Found. In the federal budget last week, Ottawa said it plans to generate billions of dollars from banks and insurers by amending tax treatment on dividends of Canadian shares held by financial institutions. Copyright 2023 The Globe and Mail Inc. All rights reserved. As lenders deal with uncertainty in the housing market, they are also bumping up against tighter regulatory conditions. Scotiabanks board may also have felt a sense of urgency to find a successor. As time passed, the uncertainty about the outcome generated friction inside the bank, according to three sources familiar with internal dynamics. The selection of Scott Thomson to become Scotiabank's new CEO has raised eyebrows over the decision not to hire one of the bank's top candidates after a three-year process. Scotiabank reports second quarter results. Nacho is an outstanding global banker with a deep knowledge of Latin America, Mr. Thomson said in a statement. Under his tenure, the bank restructured its international unit, selling off its operations in Antigua and Barbuda, and increasing its stake in its Chilean division. Bill C-18, which got royal assent last week, was designed to support the Canadian news industry, which has . All market data (will open in new tab) is provided by Barchart Solutions. Copyright 2023 The Globe and Mail Inc. All rights reserved. What to know about Bill C-18, the new law that will affect how you get news in Canada. But a better reason to take a closer look at the stock is its low valuation. Banks fund loans using the money that customers deposit into products such as chequing and savings accounts, as well as wholesale funding from larger investors the latter of which has become costlier as central banks have hiked interest rates.
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