The Bank of Nova Scotia
Halifax in the early 19th century was a busy port that handled lumber, fishery and agricultural trade. Its strategic location made it a popular stopping point for ships sailing between North America and Europe since the 18th century. In 1832, a group of Haligonian merchants established the Bank of Nova Scotia (now often known as the Scotiabank) as an alternative to the port city’s banking monopoly, a private bank called the Halifax Banking Company. In 1837, Windsor (Nova Scotia) became the bank’s first agency outside of Halifax. More agencies were opened in Pictou, Yarmouth, Annapolis and Liverpool, all within Nova Scotia, by 1839.
Economic fortunes in the 19th century, however, were highly volatile. Cycles of boom and bust were common and the bank remained a provincial bank during its first 42 years of existence. It was seven years after the Canadian Confederation that the Bank of Nova Scotia finally expanded outside of the province when the Saint John (New Brunswick) office opened for business in 1874. In 1882, an office was opened in Prince Edward Island’s Charlottetown. Just one year later, the bank acquired the Union Bank of Prince Edward Island, greatly expanding its operations in the province.
In 1882, the Bank of Nova Scotia joined the rush to head west when it opened a branch in Winnipeg. The city was booming at the time, fuelled by the construction of the trans-continental Canadian Pacific Railway and a cross-border railway linking Winnipeg and Minneapolis. Ironically, the boom ended spectacularly just as soon as Scotiabank arrived. After three years of struggles, the office was shut down. At this time, Minneapolis was the American Midwest centre of the wheat trade and flour industry. Scotiabank promptly relocated its Winnipeg operations to Minneapolis in 1885. However, the constantly shifting business eventually led to yet another move of the bank’s Midwestern operations from Minneapolis to Chicago in 1892.
Back in the East Coast, a severe economic downturn in Newfoundland felled both of its banks in 1894 – the Commercial Bank of Newfoundland and the Union Bank of Newfoundland. Newfoundlanders suddenly found themselves holding worthless banknotes and without any banking service. The Bank of Nova Scotia swung into action and promptly opened an office in St. John’s, beating the Bank of Montreal and the Merchant’s Bank of Halifax (now Royal Bank of Canada).
Despite Montreal’s long history as Canada’s primary financial centre, Scotiabank didn’t open a branch there until 1888. This was followed by the bank’s first Toronto branch in 1897. By the turn of the 20th century, the Canadian economy had become much better developed, and the bank once again ventured west towards the Prairie Provinces and the Pacific Coast. The Winnipeg branch was re-opened in 1899, and new branches were opened in Calgary, Edmonton and Vancouver in 1903, followed by Saskatoon and Regina in 1906 and 1907. Finally Scotiabank can now be called a national institution.
Internationally, merchants in Halifax have had a long history of trading Canadian salt fish, lumber and potatoes for Jamaican rum, spices, sugar and molasses. Seeing that Jamaica only had one bank at the time (the Colonial Bank, which was part of Britain’s Barclays Bank until the 1977), the Bank of Nova Scotia opened a branch in Kingston in 1889. The bank became so established in Jamaica subsequently that many Jamaican tourists visiting Canada are said to be amazed that a Jamaican bank should have so many branches in Canada, not realizing that Scotiabank is actually Canadian-based. Elsewhere in the Caribbean, Scotiabank launched operations in Cuba and Trinidad & Tobago in 1906.
Recognizing the limited opportunities in the Maritimes region compared with the rapidly industrializing Ontario economy, Scotiabank moved its headquarters from Halifax to Toronto in 1900, merely three years after its first branch opened there. In quick succession, Scotiabank then acquired the Bank of New Brunswick in 1913, the Toronto-based Metropolitan Bank in 1914 and the Bank of Ottawa in 1919. The banking industry in Canada was rapidly consolidating as smaller institutions found it increasingly difficult to obtain low-cost capital, while larger institutions were eager to acquire instant new clients and branch networks.
Peace was disrupted in 1914 when World War I broke out in Europe and elsewhere. Over 600 Scotiabank employees enlisted to fight overseas. Their void was filled by the first significant hiring of women employees.
Peace and boom times returned for the bank and Canada at end of the Great War but the Roaring Twenties came to an abrupt end when the stock market in New York crashed in 1929, triggering the decade-long Great Depression. Canada did not escape the economic train wreck and its unemployment soared as spending and industrial output tumbled. Due to the difficult economic conditions, the bank shut down a number of branches during the 1930s.
When World War II broke out in 1939, Canada, being part of the British Empire, immediately sent its soldiers across the Atlantic to join the front line. Over 900 Scotiabank employees fought overseas and suffered a heavy toll. By the time peace finally returned in 1945, much of Europe and the Orient had been devastated and millions of people had been killed, injured or displaced.
The post-war 1950s was a boom time for Canada and the U.S. as demand for Canadian and American natural resources, food staples and manufactured products from the war-torn Europe soared. An influx of new immigrants mainly from Europe also stroked demand for domestic consumption, housing and all sorts of infrastructure construction. In addition, major oil and natural gas fields were discovered in Alberta, turning Canada into a major energy exporter. In 1954, the passing of the National Housing Act and a change in the Bank Act permitted banks to offer residential mortgage loans for the first time, and Scotiabank promptly established its mortgage department. In 1957, the bank became the first in Canada to install Post-Tronics machines built by NCR to automate the posting of customers’ accounts.
Scotiabank launched a unique gold certificate product in 1958. The gold certificate is a negotiable receipt representing gold bullion held for safekeeping in the bank’s vaults. The new product made gold trading much easier and less expensive as investors no longer needed to worry about the delivery and storage of physical gold.
In 1961, Cuba’s Castro government nationalized the banking sector and Scotiabank lost its operations there. Elsewhere in the region, new branches were opened in Jamaica, Trinidad & Tobago and Barbados. Between 1975 and 1977, Scotiabank acquired 94% of Banco Mercantil de Puerto Rico. It’s obvious that by this time the bank had already had a pattern of focusing its international expansion in the Caribbean and Latin America.
Back in Canada, the rise of the auto culture and the massive suburbanization across Canada saw Scotiabank following its clients’ migration to the suburbs in the 1960s and 1970s. The “Big Bang” financial industry de-regulation in 1986 removed the ban on commercial banks from undertaking trust business and securities trading. Scotiabank in 1988 acquired securities dealer McLeod, Young & Weir Co., which was renamed ScotiaMcLeod Inc.
- In 1990, Scotiabank bought 24% of Chile’s Banco Sud Americano. In 1993, Scotiabank further raised its stake in Banco Sud Americano to 30%. The total investment for both purchases was USD $22-million.
- In 1992, Scotiabank bought an 8.5% stake in Mexico’s Grupo Financiero Inverlat for CAD $155 million. The move was in anticipation of the signing of the North American Free Trade Agreement (NAFTA) between Canada, the U.S. and Mexico in 1994. The foray into Mexico coincided with the bank’s long-term expansion in the Hispanic market.
- In 1994, Scotiabank bought Montreal Trustco (Montreal Trust) for CAD $290-million.
- In 1995, Scotiabank lost its stake in Grupo Financiero Inverlat as the Mexican bank was nationalized following the Mexican Peso Crisis of 1994.
- Also in 1995, Scotiabank bought 25% of Argentina’s Banco Quilmes for USD $57-million.
- Also in 1995, Scotiabank bought 80% of Corporacion Mercaban of Costa Rica, the holding company of Banco Mercantil de Costa Rica. By 2000, Scotiabank had privatized the entire bank now with over 40 branches.
- In 1996, Scotiabank re-purchased 10% of Grupo Financiero Inverlat for USD $31-million from Mexico’s state bank rescue agency Fobaproa, becoming the first foreign bank to re-enter the Mexican market after the 1994 economic crisis. Scotiabank also bought USD $144-million of debentures convertible into 45% of the Mexican bank in 2000.
- Also in 1996, Scotiabank bought 52.85% of El Salvador’s Banco Ahorromet.
- In 1997, Scotiabank bought the 75% of Argentina’s Banco Quilmes that it didn’t already own for USD $260-million.
- Also in 1997, Scotiabank bought 25% of Peru’s Banco Sudamericano for USD $14 million.
- Also in 1997, Scotiabank bought Canada’s National Trustco (National Trust) for CAD $1.25-billion. National Trust’s 175 branches gave Scotiabank a boost in Ontario, which was historically a weak spot for Scotiabank.
- Also in 1997, Scotiabank bought London bullion dealer Mocatta from Britain's Standard Chartered Bank for USD 26-million to form ScotiaMocatta. Mocatta is one of the world's biggest bullion dealers, and can trace its history to 1671.
- In 1999, Scotiabank increased its stake in Chile’s Banco Sud Americano to 60.6% for USD $116-million.
- In 2000, Scotiabank acquired the 39.4% of Chile’s Banco Sud Americano that it didn’t already own for USD $114-million.
- Also in 2000, Scotiabank increased its stake in El Salvador's Banco Ahorromet to 98%.
- In 2002, Scotiabank bought discount broker Charles Schwab Canada Co.
- Also in 2002, during the Argentine economic crisis, Scotiabank opted to give up its Argentine operations Scotiabank Quilmes rather than to inject more capital into it. The 91-branch Scotiabank Quilmes was transferred to local banks Banco Comafi and Banco Bansud. Scotiabank took a CAD $540-million charge for the loss of Scotiabank Quilmes.
- In 2003, Scotiabank bought 40 branches and clients from Dominican Republic’s insolvent Banco Intercontinental.
- Also in 2003, Scotiabank acquired another 36% of Grupo Financiero Inverlat for USD $323-million from Fobaproa, raising its ownership of the Mexican bank to 91%.
- In 2004, Scotiabank bought a 2.5% stake in China’s Xi’An City Bank.
- In 2005, Scotiabank bought El Salvador's Banco de Comercio (BanCo) for CAD $212-million (USD $178-million). BanCo had 67 branches and a 17% market share.
- In 2006, Scotiabank bought Canada's Maple Trust for CAD $223-million.
- Also in 2006, in a complex transaction, Scotiabank acquired Peru's Banco Wiese Sudameris from owner Banca Intesa (now Intesa Sanpaolo). Banco Wiese Sudameris was integrated into Scotiabank’s 35%-owned Banco Sudamericano (Peru). The total cost of the complex transactions was CAD $385-million. Scotiabank would own 77.8% of the combined bank, named Scotiabank Peru S.A.A. and Intesa Sanpaolo would hold the remaining stake.
- Also in 2006, Scotiabank bought Citibank's retail banking operations in Dominican Republic.
- Also in 2006, Scotiabank bought Costa Rica's Corporacion Interfin for CAD $325-million.
- In 2007, Scotiabank acquired a 10% stake in Puerto Rico's First BanCorp for USD $94-million.
- Also in 2007, Scotiabank acquired a 24.99% stake in Thailand's Thanachart Bank for BHT 7.1-billion (CAD $240-million, USD $203-million). Thanachart operated 142 branches in Thailand and was the country's leading auto lender.
- Also in 2007, Scotiabank agreed to buy Chile's Banco del Desarrollo for USD $1.03-billion (CAD $1.09-billion). Banco del Desarrollo had 74 branches. Bank of Nova Scotia's local subsidiary Scotiabank Sud Americano already operated 57 branches. Combining the two Chilean banks would make Scotiabank the No. 6 bank in Chile.
- Also in 2007, Scotiabank agreed to buy 18% of DundeeWealth Inc. for CAD $348-million. DundeeWealth was 55% owned by Dundee Corp. Scotiabank also agreed to buy Dundee Bank of Canada for CAD $260-million. However, one week after the agreement, mutual fund giant CI Financial launched a hostile bid for 100% of DundeeWealth for CAD $2.36-billion. CI's per-share offer for DundeeWealth was 58% higher than Scotiabank's. However, DundeeWealth’s majority owner Dundee Corp. subsequently proceeded with the sale with Scotiabank.
- Also in 2007, Scotiabank bought a 10% stake in Puerto Rico’s First Bancorp, the largest financial holding company in the territory.
- In 2008, Scotiabank bought Grupo Atlas Cumbres (of Chile)'s banking operations in Guatemala and the Dominican Republic. Under the agreement, Scotiabank would buy GAC's Banco de Antigua in Guatemala as well as selected assets of Banco de Ahorro y Credito Atlas Cumbres in the Dominican Republic. Banco de Antigua had 47 branches and 98 "Rapidito" service kiosks in Guatemala, whereas Banco de Ahorro Credito Atlas Cumbres had 6 branches in the Dominican Republic.
- Also in 2008, Scotiabank bought an additional 20% stake in Scotiabank Peru from Italy's Intesa Sanpaolo. Terms of the deal were not announced but Canada's Globe and Mail newspaper said the deal was worth about CAD $200-million (USD $199-million, Eur 129-million). With the latest purchase, Scotiabank now owned 98% of Scotiabank Peru, the country's No. 3 bank.
- Also in 2008, Scotiabank bought Peru's Banco del Trabajo from Grupo Atlas Cumbres. Banco del Trabajo is Peru's 9th largest commercial bank with 132 points of sale and a 1% market share.
- Also in 2008, Scotiabank bought E*Trade Canada for CAD $444-million (USD $442-million). E*Trade Canada had about 125,000 active accounts and about CAD $4.67-billion (USD $4.7-billion) of client assets.
- Also in 2008, Scotiabank bought Sun Life Financial’s 37% stake in mutual fund manager CI Financial for CAD $2.3-billion (USD $2.09-billion). Scotiabank would pay Sun Life CAD $1.55-billion in cash, CAD $500-million in Scotiabank stock and CAD $250-million in preferred stock for the purchase.
- In 2009, Scotiabank reached a deal with the Bank of England to lease space in the British central bank’s vault in Central London to store precious metals.
- Also in 2009, Scotiabank bought an additional 24% of Thailand’s Thanachart Bank for CAD $270-million (USD $216-million), raising its stake in Thailand’s No. 8 bank to 49%.
- In 2010, Scotiabank raised its holding in Xi’An City Commercial Bank to 18.1% from 2.5%. Following this latest purchase Scotiabank’s investment in the Chinese bank totalled CAD $162-million. Xi’An City Commercial was created in 1997 by consolidating 42 urban credit co-operatives in Xi’An. As at 2009, it had 113 branches and served 1.2-million clients.
- Also in 2010, Thanachart Bank, 49% owned by Scotiabank, acquired a 47.6% stake in Siam City Bank for BHT 32.7-billion (CAD $1.03-billion, USD $1-billion) from the Thai government. Thanachart Bank would tender for the rest of Siam City and hope to merge the two banks. The deal valued the entire Siam City Bank at BHT 68-billion (USD $2.1-billion). Siam City had 400 branches currently. If successful, the combined bank would have 660 branches and became the No. 5 bank in the country.
- In April 2010, Scotiabank acquired bankrupt Puerto Rican bank R-G Premier Bank from the Federal deposit Insurance Corp. Scotiabank gained 29 branches to its existing 17-branch network in the U.S. territory.
- In July 2010, Scotiabank bought the Royal Bank of Scotland’s wholesale banking operations in Colombia.
- In late 2010, Scotiabank made three minor acquisitions in Latin America. It acquired Dresdner Bank Brasil from Commerzbank AG, the Royal Bank of Scotland’s Chilean wholesale banking operations, and BNP Paribas’ wealth management business in Panama, the Cayman Islands and the Bahamas.
- In November 2010, Scotiabank acquired the 82% of DundeeWealth that it didn’t own for CAD $2.3-billion (USD $2.25-billion) in cash and stock. DundeeWealth oversaw CAD $78.5-billion in assets. Following the purchase, Scotiabank would become the No. 5 mutual fund manager in Canada.
- In December 2010, Scotiabank acquired Uruguay’s No. 4 private-sector bank, Nuevo Banco Comercial as well as Ponto!, the country’s No. 3 consumer finance firm. Nuevo Banco Comercial had 49 branches in all 19 provinces, 710 employees and 85 ATM in Uruguay, plus three branches in Brazil. Ponto! had 37 branches, 610 retail points of sale and provided personal loans to 200,000 clients.
- In September 2011, Scotiabank acquired a 19.99% stake in China’s Bank of Guangzhou (BGZ) for CAD $719-million (CNY 4.65-billion, USD $723-million). BGZ had 84 branches in the city of Guangzhou, a city of 11-million people. BGZ was a major lender to the city’s real estate developers.
- In October 2011, Scotiabank bought 51% of Colombia’s Banco Colpatria Red Multibanca Colpatria SA for CAD $1-billion (USD $1-billion). Banco Colpatria was Colombia’s No. 5 bank and operated 175 branches. It was, however, the country’s No. 2 credit-card issuer.
- In August 2012, Scotiabank agreed to acquire ING Bank of Canada from ING Groep of the Netherlands for CAD $3.13-billion in cash (EUR 2.52-billion, USD $3.09-billion). Scotiabank would run the on-line bank as a separate entity. In buying ING Direct Canada, Scotiabank gained CAD $40-billion in assets, $30-billion in deposits, 1.8 million clients and 1,100 employees. To fund the purchase, Scotiabank raised CAD $1.51-billion from a bought-deal issuance of 29 million new shares at $52 each.
- In April 2013, Scotiabank bought 50% of BBVA's Peruvian pension fund management business AFP Horizonte for CAD $260-million (USD $255-million). Scotiabank and SURA Asset Managment, which acquired the other 50% of AFP Horizonte, would split up the business between themselves, and Scotiabank's portion would be integrated into its existing Peruvian asset manager Profuturo AFP. The entire AFP Horizonte had USD $9-billion of assets under management, 1.4-million clients and 17 offices.
- In July 2013, Scotiabank announced that its agreement to buy 19.99% of China's Bank of Guangzhou has been terminated. For unannounced reason, the Chinese authorities refused to approve the deal.
- In May 2014, Scotiabank took a 20% stake in home furnishing and auto parts retail giant Canadian Tire Corp.'s financial services unit for CAD $500-million (USD $460-million) cash. Canadian Tire Financial Services is the eighth largest credit card issuer in Canada. The company has the option to sell another 29% of the unit to Scotiabank by 2024.
- In June 2014, Scotiabank bought 51% of Cencosud Administradora de Tarjetas S.A. from Chilean retailer Cencosud S.A. for CAD $300-million (USD $280-million). The trasaction included 51% of the retailer's credit-card units, plus 100% of the loan portfolio. Cencosud has the right to buy back the stake sold in 2029.
- Also in May 2014, Scotiabank sold a 25.6% stake in mutual fund manager CI Financial for CAD $2.3-billion (USD $2.12-billion) in a bought deal. Following the sale, the bank's stake in CI Financial would fall to 11.4%.
- In July 2015, Scotiabank bought Citigroup's retail and commercial banking units in Panama and Costa Rica, increasing its client base in both countries from 137,000 to 387,000. Terms of the deal were not announced.
- In October 2015, Scotiabank acquired JPMorgan Chase's Canadian MasterCard and private-label credit card portfolio, which had over 2-million active accounts and CAD $1.7-billion (USD $1.315-billion) of receivables. Terms of the deal were not disclosed, but the price tags for such transactions are typically close to the amount of the receivables. The deal included department store chain Sears Canada-branded credit cards.
- In May 2017, Scotiabank agreed to sell its Malaysian subsidiary Bank of Nova Scotia Berhad to Taiwan's Cathay Financial Holding Co. Ltd. for CAD $330-million. However, the transaction failed to close and was called off in early 2018.
- In November 2017, Scotiabank made a binding offer to acquire 68.19% of BBVA Chile from Spain's Banco Bilbao Vizcaya Argentaria for USD $2.2-billion (CAD $2.9-billion, EUR 1.89-billion, CLP 1.44-trillion). The offer is however subject to the approval by Chile's Said family, which owns 31.62% of BBVA Chile. BBVA Chile had USD $22-billion of assets, 127 branches and 4,000 employees. Scotiabank Chile had USD $20-billion of assets, 89 branches and 3,700 employees. If successful, the combined bank would rank No. 4 in Chile with a 14% market share.
- In January 2018, Scotiabank's 51%-owned Banco Colpatria Multibanca Colpatria agreed to buy Citibank's consumer (retail banking and credit cards) and small and medium enterprise operations in Colombia for an undisclosed amount. The purchase included 47 branches and 424 self-served access points across Colombia. It also added 500,000 new clients to Banco Colpatria's existing 1.5-million clients.
- In February 2018, Scotiabank agreed to buy asset manager Jarislowsky Fraser Ltd. for CAD $950-million (USD $755-million). Jarislowsky Fraser had CAD $40-billion of assets under management, of which about $27-billion belonged to pension funds and other institutional investors. Scotiabank traditionally had been the weaker player of Canada's Big Five banks in terms of investment banking and wealth management. Following the purchase, Scotiabank would have CAD $166-billion under management. Jarislowsky Fraser itself had a reputation as a vocal critic of poor corporate governance of the firms that it held shares of.
- In May 2018, Scotiabank agreed to buy 51% of Peru's Banco Cencosud for CAD $130-million (USD $101-million) from supermarket and department store chain Cencosud Peru. Banco Cencosud offered credit card and personal loan services to 315,000 clients and had USD $186-million of receivables. Following the purchase, Scotiabank Peru will become the 2nd largest credit card issuer in the country.
- Also in May 2018, Scotiabank agreed to acquire privately-held MD Financial Management from the Canadian Medical Association (CMA) for CAD $2.59-billion (USD $1.99-billion) in cash. MD Financial managed over CAD $49-billion of assets on behalf of physicians (medical doctors) and their families across Canada. As part of the agreement, CMA will actively and exclusively promote Scotiabank as the preferred bank for physicians in Canada for ten years.