In last Friday's Financial Gleaner, part one of an exclusive interview was published on the background of new Scotia Group Jamaica boss, Bruce Bowen. Today we present Bowen's views on his role at Scotia.

Laura Tanna, Contributor

Bruce Bowen, president and CEO of Scotia Group Jamaica, had been called away on January 20 by the governor of the Bank of Jamaica during our last interview.

He explained: "The heads of some of the larger banks meet regularly with the governor to talk about what's happening in the foreign exchange market. He always wants to make sure that if there is devaluation, that it's orderly and doesn't get panicky."

Bowen also noted that the Government had approached the Bank of Nova Scotia (BNS) for a $100 million loan "because global bond markets that they and governments everywhere have typically gone to around the world are not dried up completely but there's very, very little available. That's why they've gone to the multilaterals more. And they have gone back to approaching banks. As the economy changes, as the global financial market changes, they're doing the right thing."

In terms of the global economy, how has the crisis affected Canada and Scotiabank Jamaica's parent company?

Bowen says: "Everyone other than Canadians recognise that the Canadian economy has been one of the strongest in the world. The government there has been running budget surpluses for five or six years. I believe the government there has said that for the first year they're going to have to move to a fiscal deficit. There was US$200 or US$300 million globally that BNS wrote off but that's on the basis that we make about US$3-4 billion a year. Our strength globally is our diversity. We've got about a third of our business as Canadian banking business, a third that's international and about a third that's corporate investment banking. If there's stress in one of those areas, another one's holding up OK. Here, in Jamaica, we continue to report good profits."

Scotiabank autonomy

Jamaicans always want to know to what extent Scotiabank here has autonomy from the bank in Canada, and to what extent does the local board have to go back to Canada for direction.

"Wow," he responds. "The way the bank works globally is the degree of autonomy delegated locally is a function of the size and the strength, resources and capabilities of the country. In the Caribbean, Jamaica is by far the largest, so we'd have the most autonomy. But there are limits. Credits over a certain amount have to go to Canada.

"A lot of systems issues are centralised. One of the efficiencies of a global bank is having some commonality of systems. On the other hand, some systems are unique to a country. For those we have more say in what the solution is. So it's area by area." There may be less autonomy than enjoyed by a local bank, but with today's communications BNS should move as quickly.

"The offsetting strength is you have the capital of a global bank, one of the largest in the world, so you've got all of that strength behind you. We remain the number one bank in Jamaica. So, obviously, it works pretty well."

In addition to his earlier work in Jamaica and in Trinidad, Bowen also served in Puerto Rico. Now, what is his place in the hierarchy of the parent company?

"We have a senior management team in the International Division, which comprises about 12 of the heads of our largest banks," says Bowen, "together with about 12 of the most senior department heads of the division, and that group is the senior management group of International that support and help develop the strategy and look at priorities and do the decision making.

"I think this is a global trend, but one of the real changes over the last 10 years that I've seen in the bank is where that group used to get together and sort of be talked to and told what the plans are, that group has really become a group that sit around the table as peers and thrash things out. It's never exactly what I may think we can do. It's never exactly what someone else thinks we can do, but everyone has equal voice and we come to decisions on it. We all agree to then implement what is the consensus we come up with. We try to have these sessions two or three times a year."

He continues: "A large organisation like ours in and outside Jamaica is built up of all kinds of different departments and different people. If any leader of any of our global organisations only job is to do what a whole bunch of people in Toronto want them to do, they certainly don't need someone of my level and my pay to do it. My job is to make sure that we're using the combination of our local expertise, and our local knowledge of the market, and the capabilities of a global bank, so that we're doing the right thing for Scotia Group Jamaica. That is my job. I mean, you do what makes sense for the country."

And how long is he likely to be in Jamaica?

"I can't see it being less than four to five years. We don't come in with an official here's your four, five things you have to accomplish," Bowen replies. "We have a great team of people but you've got to identify and groom a couple of people who could take over from me so that someone can."

Biggest challenge

He sees his biggest challenge as integrating the wealth management acquisition of DB&G and the insurance business into the group to really use the advantages gained by being part of the larger Scotia Group. He also hopes the Financial Services Commission (FSC) will eventually make changes to help the economy grow.

"Right now the vast majority of investments made are repos," Bowen explains [to the uninitiated, financial institutions offer repos (or repurchase agreements) backed usually by long-term government securities which offer a fixed interest rate for a specified (usually short-term) period to investors].

Bowen continues: "There needs to be, over time, the development of more investment options for Jamaicans. If I buy a repo from Scotia DBG, I'm counting on Scotia DBG to pay me my money at the end of it. So that's a liability for Scotia DBG. Now there's an underlying asset, its backed by say a government security, but none of us count on having to go collect that bond and sell that bond in the market place.

"There's a primary obligation on the institution you buy it from and, as a result [the broker/dealer is legally obliged to maintain a larger amount of capital than would otherwise be the case], a broker/dealer has a certain amount of capital and as they take on a lot of those repos, it's really like a bank leveraging up their capital base. If all the growth is in repos, it puts more leverage on the financial institution to take more risks. If there were more investment alternatives, then the broker/dealers wouldn't have to continually leverage their capital base. Investors over time need to have options that they would take the direct underlying risk of the government bond or something like that and get a higher return."

The broker/dealer industry

This would reduce the broker/dealer balance sheet liability. Bowen explains that the FSC has to watch the stability of the broker/dealer industry and also needs to ensure that investors are protected and not being sold something they don't understand so it will take a while "to get from point A to point B", but he was encouraged by his initial meeting with the new head of the FSC and his senior team.

What investment advice would he give clients this coming year?

Bowen declares: "I'm a firm believer in diversification so that people shouldn't have all their money in one thing. If people can get to the stage they can afford it, I recommend start with a home, a piece of real estate and, beyond that, based upon your risk tolerance, your weight may be more to equities, more to foreign securities, and then a certain amount to fixed income. I would not be selling stocks right now if they've gone down in value. As long as you're diversified and you don't have to have the cash, I would stay in. But some people can't afford to."

No plans to lay off any employees

Despite gloom about the economy, Bowen says BNS has no plans to lay off any of their 2,200 employees. Rather, group emphasis will be on greater efficiency, "making sure every dollar we're spending, we're spending it wisely." Asked if there would be cuts on sponsoring cultural, community or sporting events, he responded with a quick: "I think it's important that we DON'T! There's a lot of Jamaicans who count on their dividends from Scotiabank to supplement their pensions and other things, so we have to grow our business. But it's at times like this we have to step up and support the government and community. Our challenge is how do we do it efficiently? I don't want people saying: 'Look at all the money they're spending when it's a real difficult year'. We've got to make sure that we are being prudent but absolutely, we need to continue to support the community."

He noted how proud he was of the huge organisation of Scotia volunteers who become involved in community action.

As for advice for the Government, this quietly confident leader has a genuine understanding and empathy for the multitude of urgent problems facing the Jamaican Government now. "It's an issue of priorities and politically getting things through."

Bowen recommends: "As leaders in business, in industry, leaders of unions, leaders of churches, leadership anywhere, it's important that we be communicating because people look up to us to see 'Should I be worried or not?' People like to know there's a plan and you're moving forward on it. That you're dealing with the short-term and still working towards a long-term objective. I think that is, in times of uncertainty, ESPECIALLY important."