Ashford W. Meikle, Business Reporter
Senior vice-president for Wealth Management and Investment at Scotiabank, Anya Schnoor (right), addresses journalists at a press briefing to present the bank's third-quarter financial results at Scotiabank centre downtown Kingston recently.Looking on are the President and CEO of BNS, William Clarke (centre), and executive vice-president operations and service delivery, Rosemarie Pilliner. - Norman Grindley/ Deputy Chief Photographer
Faced with a slow-down in profits and shrinking margins, Scotiabank is trying to expand revenues by growing its wealth management arm with business from high networth investors, a segment the bank admits it might have neglected.
"The broker/dealer community has sort of dominated the market and we have not been a dominant player but we intend to change that," said president and chief executive officer William 'Bill' Clarke.
The bank now has a wealth management arm managed by Anya Schnoor, formerly of Pan Caribbean Financial Services.
"I think it is a great move," senior research manager at Barita Investments, Patrick Crowl, commented.
"I think the move by BNS to create that arm is to tell their clients that 'We now have a specialised area for you with trained staff to handle your assets,' is a good move. Right now, BNS is like a one-stop shop - there is no differentiation in the services that are offered to clients whether you have $10 million or $100 million."
Technically, the division is not yet operational as it still needs the final nod from regulators.
The country's biggest bank
Bank of Nova Scotia Jamaica remains the country's biggest bank. Up to the end of June it controlled 42 per cent or almost $55 billion of total retail loans and 44 per cent or $112 billion of commercial bank deposits. But recently its performance has been relatively flat.
Last year, its net profit grew by less than one per cent even though it continues to have solid and fairly stable earnings. For its financial year to October 31, 2005, the bank earned $5.8 billion on total revenues of $17.5 billion.
For its third quarter to July 2006, gross earnings were up almost 10 per cent, but nominally, the figures appeared flat moving from $6.1 billion in 2005 to $6.7 billion in the third quarter of 2006.
BNS' bottomline was 17.6 per cent healthier however, at $1.685 million.
Most commercial banks in sophisticated financial markets, Crowl says, have wealth management arms.
NCB Capital Markets, a subsidiary of Scotiabank's main competitor National Commercial Bank, was responsible for 45 per cent of the NCB Group profits last year.
BNS's new unit, says Crowl, is long overdue.
"A lot of their clients who are doing business elsewhere will now be attracted to BNS. In fact, I think it will pull other clients from other commercial banks and financial houses," said Crowl.
Massive campaign
"They also need to do a massive campaign to let people know that this is different from their other products."
According to Clarke, speaking recently at a press conference to announce the bank's third-quarter results, the wealth management division will primarily encompass Scotia Investment Management, Scotia Life Insurance Company and the private banking division.
"These entities within the group are going to drive the wealth strategy arm of the group and we are going to get a fair share of that business from the competition," said the bank president.
Schnoor, also speaking at the press conference, indicated that one of her immediate tasks was to turn the spotlight on the menu of products available at the bank.
"There are lots of products that Scotiabank has that the public is not aware of because it is really known for its banking products and these (investment) products have not received the same significant exposure as its retail operations," she said.
Crowl reasoned that it the establishment of the wealth management arm is unlikely to create a drag on BNS's bottomline and might push up its stock price.
"It won't cost much ... as a matter of fact, if anything, it may cut costs and shed some expenses from other areas. Their numbers look great. I am surprised the stock hasn't gone up," said the investment manager.
Scotiabank's stock price closed at $19.95 on Wednesday, a decline of 11 per cent on the $22.50 it started the year.
The division is still awaiting the nod from regulators.
"It takes regulatory approval to get new products," said Schnoor. "You have to make sure you have operational and IT systems in place, and you have to train your staff; so it is going to be a process."
- ashford.meikle@gleanerjm.com
