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Bank of Nova Scotia BNS-T chief executive officer Scott Thomson said that Canada could bolster its waning productivity by building links between businesses across North America – a key component of the bank’s turnaround strategy.

The Bank of Canada warned in late March that the country’s soft labour productivity and low business investment levels pose an emergency that makes it more difficult to ease inflation, which could worsen living standards. During Scotiabank’s annual shareholder meeting Tuesday, Mr. Thomson said the lender’s plan to connect businesses to facilitate deals, trade and lending opportunities across Canada, the United States and Mexico is a way to help boost productivity.

“Our economic potential is undeveloped at a time when the world needs us to be aligned, productive and competitive,” Mr. Thomson said. “We can increase North American economic integration through concerted efforts at nearshoring, reducing regulatory hurdles and ensuring businesses can access capital efficiently and smoothly across geographies.”

Bank of Canada warns of low productivity ‘emergency,’ making it harder to control inflation

The bank unveiled its strategic overhaul plan in December, focused on reallocating capital from its Latin American division to its North American businesses, where it believes it has more significant opportunities for growth.

The bank plans to deploy 90 per cent of its capital over the next few years – up from 70 per cent in 2023 – to its businesses in Canada, the U.S. and Mexico, where it believes it can benefit from rising trade in the region.

The combined gross domestic product of the three countries is about US$30-trillion, accounting for about 19 per cent of global GDP – more than the contribution of the European Union. Trade flows across North America have risen at an annual pace of more than 5 per cent over the past five years, Mr. Thomson said at the meeting.

“That said, we have not always taken full advantage of those opportunities to build an even more productive and integrated economy that benefits all citizens across the region,” he said. He added that Canada’s productivity has lagged its peers in the Organization for Economic Co-operation and Development, including the U.S.

The strategic shift is aimed at reviving the bank’s beleaguered share price, which has underperformed its peers over the past decade.

In response to a shareholder question about when the new plan would begin boosting the lender’s stock, Mr. Thomson said the strategy is still in the early stages of its rollout, and the bank has already started seeing benefits from the changes. Scotiabank beat analysts’ profit expectations for the first quarter ended Jan. 31.

“The first quarter was a good quarter for the bank, and you saw shareholder returns respond to that,” Mr. Thomson said. “Now we’ve got to keep that momentum up. And if we can do that, and execute on the plan that we laid out on Dec. 13, you’ll be asking a different question in a couple of years.”

Shareholders voted Tuesday against proposals asking the bank to disclose the impact of divestment from the Canadian oil and gas sector, report country-by-country compensation ratios and tax havens, and hold an annual advisory vote on its environmental objectives.

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