Scotiabank’s Cathedral branch in Puebla, Mexico: ‘We have a wonderful road to run in markets like Mexico, Chile and Peru which saw 25-per-cent growth last year.’KEITH DANNEMILLER
Canadian banks have put a major focus on their wealth management businesses in recent years, and Bank of Nova Scotia sees expansion in emerging economies as one of the biggest growth opportunities for the sector.
The bank is looking to increase its footprint in South America and Asia, where the growing ranks of the middle class find themselves with more wealth to manage. Companies such as Scotiabank see an increasing demand for services such as pensions and retirement planning in these countries.
They also see more room to grow organically: "We have a wonderful road to run in markets like Mexico, Chile and Peru which saw 25-per-cent growth last year," Jordy Chilcott, head of Scotiabank's retail global asset management, said in an interview.
Asia is also ripe for wealth management services. Mr. Chilcott recently returned from a trip to China where the bank's asset-management arm launched a joint-venture partnership with Bank of Beijing in mid-March. "This was the first bank asset manager approval in China since the global financial crisis hit in 2008," he noted.
Canadian banks and life insurers are increasing their focus on wealth management for two key reasons. The first is a demographic shift, to cater to baby boomers nearing retirement who are looking for saving, investing and estate planning services.
The second, and arguably more attractive, pull of wealth management is that it is a lower-risk, fee-based business that doesn't tie up capital the way lending and trading do. Banks also have a leg up on independent fund managers because of their ability to cross-sell their wealth management products to customers.
Before Scotiabank decided expand its wealth management business abroad, it increased the business line in Canada. In 2010, it bought the 82 per cent of independent asset manager DundeeWealth Inc. that it didn't already own, for $2.3-billion. Since August, 2012, Mr. Chilcott has been chief executive of Dynamic Funds, a unit of DundeeWealth that is now part of the Scotiabank family.
The bank bought its original stake in the Dundee Wealth in 2007, after other acquisitions such as an online brokerage, TradeFreedom Securities Inc., and the $2.3-billion purchase of a 36-per-cent stake in CI Financial from Sun Life Financial Inc.
Scotiabank had $131-billion in assets as of Jan. 31, up from $115-billion at the end of the previous quarter.
In addition to trying to expand the bank's asset management business abroad, Mr. Chilcott said he is focused on hiring people to help build on Scotiabank's institutional business. "We've seen the institutional opportunities at Dynamic, through Scotiabank's relationships and global footprint, but it's an area of the firm we've yet to fully develop," he said.
Another way Scotiabank has been looking to grow, both abroad and at home, is through the addition of high-profile talent. On Wednesday, Dynamic Funds said Myles Zyblock, a 10-year veteran of Royal Bank of Canada's investment banking business, will join the firm as chief investment strategist.
Mr. Zyblock, who was chief institutional strategist at Royal Bank, will succeed Rohit Sehgal, who helped to build Dynamic into an independent heavyweight fund company before its sale. Mr. Sehgal will continue to manage alternative assets with a colleague, while shifting control of funds he co-managed to another team member.