Friday, April 10, 2015

Canada’s Scotiabank Considers Cuba Expansion

Canada's Scotiabank Considers Cuba Expansion
CEO Brian Porter recently took 'exploratory trip' to assess Cuban growth
prospects
By RITA TRICHUR
Updated April 9, 2015 4:49 p.m. ET

OTTAWA—Bank of Nova Scotia, Canada's third-largest bank by assets, is
exploring potential expansion opportunities in Cuba now that the U.S. is
moving to normalize relations with the Caribbean country, the lender's
top executive said.

Scotiabank Chief Executive Brian Porter recently took an "exploratory
trip" to assess growth prospects in Cuba, where it already has a
representative office in Havana. Its main focus is currently on trade
finance for transactions of agricultural products and medical supplies
to Cuba.

"We'd like to expand beyond that," Mr. Porter said in an interview after
the bank's annual meeting in Ottawa.

"So, could we open a branch? We're exploring that possibility," he said.

Although Scotiabank would initially look at other commercial-banking
opportunities in Cuba, "personal banking" could become a focus in years
to come, he said.

Scotiabank once had a notable presence in Cuba. The Canadian bank first
entered the country in early 1906 when it opened a branch in Havana. It
eventually grew its footprint to eight branches across the country.

But in 1960, the Cuban Government nationalized all banks on the island.
That prompted Scotiabank to withdraw its services from all eight
locations before its Cuban businesses was transferred to Banco Nacional
de Cuba.

At the end of 2011, Scotiabank was laying the groundwork to re-enter the
country after being granted a license to do so by the Central Bank of
Cuba. Scotiabank's representative office opened its doors in 2012.

"We were a significant presence, so that could all happen again
sometime," Mr. Porter said.

Toronto-based Scotiabank, which bills itself as Canada's most
international bank, also has other has extensive Caribbean operations.
The bank has operated in the Caribbean since 1889, initially to
facilitate the trading of sugar, rum and fish. Scotiabank has operated
in the Caribbean longer than it has operated in Toronto.

But a prolonged economic downturn in the Caribbean since the financial
crisis has created challenges for Scotiabank and other Canadian banks,
such as Royal Bank of Canada and Canadian Imperial Bank of Commerce,
that operate there.

During Scotiabank's annual meeting on Thursday, Mr. Porter told
shareholders that the bank remains committed to the Caribbean region for
the long term.

"Canada has 70 years of diplomatic relationships with Cuba," Mr. Porter
said during an interview following the meeting. "And we're the
pre-eminent bank of the Caribbean, so it is logical for me to go there."

Part of the potential attraction is that Cuba is home to 11.5 million
educated people, while a number of Canadian companies, including
Sherritt International Corp., already have operations there.

"Cuba attracts 1.2 million Canadian tourists a year, and so it would fit
in nicely with the rest of our Caribbean presence," Mr. Porter said.

Recent moves by the U.S. to normalize relations with Cuba, meanwhile,
are creating added potential for Scotiabank, because restoring ties with
the U.S. signals that Cuba has a desire to change, Mr. Porter said.

The island has an abundance of natural resources, so normalized
relations with the U.S. could create new business opportunities,
including the building of more modern infrastructure. Canadian companies
including Scotiabank could benefit from that potential for increased
commercial and trade activity.

"You've got 50 years of tensions that are starting to thaw…In that will
be an opportunity for Scotia," he added.

Scotiabank has about C$2 billion in excess capital that could
potentially be deployed for acquisitions. Although the bank has
previously said its main focus is growing scale in the Latin American
countries of Mexico, Colombia, Chile and Peru, Mr. Porter indicated
Thursday that he isn't ruling out other possibilities.

When asked during a news conference earlier in the day about potential
acquisition opportunities in Brazil, Mr. Porter said he is traveling to
Brazil next week, in addition to Chile, to visit corporate customers and
gauge how they are feeling about the economy.

"Bank consolidation in Brazil has largely happened. We did buy some
operations of a European bank five or six years ago. We're happy with
that," Mr. Porter told journalists.

"But you know, this bank has a history of being opportunistic. Brazil
will come back, the economy will come back—there's no question about
that. It's an exciting market and an attractive market. And you know, we
look at these markets for the long-term," he added.

Write to Rita Trichur at rita.trichur@wsj.com

Source: Canada's Scotiabank Considers Cuba Expansion - WSJ -
http://www.wsj.com/articles/canadas-scotiabank-considers-cuba-expansion-1428606282

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