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Scotiabank makes play for the ultrarich Add to ...

Bank of Nova Scotia has teamed up with high net worth investor network Tiger 21, marking a new play to lure lucrative, uber-rich clientele who typically have at least $10-million in assets, and sometimes have $100-million or more.

These clients, often referred to as 'high net worth' customers, have grabbed the attention of some of Canada's biggest banks who continue to rebuild coming out of the recession. In this restructuring, wealth management has become a critical platform because it generates hefty fees but takes up very little of the banks' capital.

Within wealth management, high net worth clients are extremely important simply because their holdings generate more fees. For that reason, last fall Bank of Montreal launched a new division that caters solely to the ultra-rich and hired a bunch of financial advisers, accountants and other specialized professionals to build out its BMO Harris Private Banking division.

Scotia typically hasn't been the strongest player in the wealth management space. Although it has owned a 38 per cent stake in CI Financial Corp. since 2008, the bank's own platform didn't really make waves until it announced its purchase of DundeeWealth for $2.3-billion last fall. Because the Tiger 21 announcement comes a few months after that deal, the news isn't so much what the deal offers Tiger 21 clients, but what Scotia is doing to get its name out there in these circles.

Tiger 21 is an exclusive investment club in which members meet monthly in 12 to 14 person groups to throw around investment ideas. Think of it as a fancy book club, but stock talk replaces the book chatter. Membership requirements include at least $10-million (U.S.) in investable assets and a willingness to pay $30,000 a year in membership fees.

The group started in New York, but in 2010 Tiger 21 expanded into Canada and now has groups in Vancouver, Calgary and Toronto. Under the deal with Scotia, Tiger 21 members will be able to access one of bank's special private client borrowing services that allows them to group different types of investment holdings as collateral for an investment line of credit. In other words, they can bundle different securities and then borrow against them to drum up cash for more investments.

 

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