Bank of Nova Scotia BNS-T is launching the first majority Indigenous-owned investment dealer in Canada through an agreement with two Indigenous development corporations and one First Nation.
Cedar Leaf Capital Inc., the proposed company that still requires regulatory approval, would provide institutional clients across Canada with financial advisory services and act as an underwriter of Canadian fixed-income securities. The dealer plans to bolster Indigenous participation in capital markets and help generate commercial opportunities.
The dealer would initially be operated by Scotiabank, and majority-owned by the Squamish Nation’s Nch’ḵay̓ Development Limited Partnership in British Columbia, the English River First Nation’s Des Nedhe Financial LP in Saskatchewan and the Chippewas of Rama First Nation in Ontario.
The three Indigenous shareholders would own a combined 70 per cent of Cedar Leaf Capital, or about 23 per cent each. At the outset, Scotiabank plans to provide the infrastructure and tools to develop the investment dealer’s operations. Once Cedar Leaf Capital has fully built its own operations, Scotiabank would reduce its interest in the dealer.
Cedar Leaf Capital has tapped Indigenous banking veteran Clint Davis to take on the lead role as CEO. The investment dealer intends to join syndicates on new bond offerings, with the goal of eventually leading on these deals. It would also seek to partner with organizations to help them meet their reconciliation commitments.
“You’re starting to see more and more Indigenous people looking to capital markets as a way to get access to capital. There are still huge barriers, and there are still significant hills to climb,” Mr. Davis said in an interview. “We’re just at the cusp of this.”
In December, Scotiabank’s new chief executive officer Scott Thomson launched the lender’s strategic turnaround plan, aimed at reviving the bank’s beleaguered share price. In its capital-markets division, the bank set a goal of growing its earnings by 7 per cent over the next five years, in part by generating more underwriting and advisory-fee income.
“Clients are interested in being involved with an Indigenous broker dealer. Governments, corporations, everyone has expressed interest in moving closer to Indigenous communities and supporting them,” said Loretta Marcoccia, Scotiabank executive vice-president of global operations and technology, and Cedar Leaf Capital chair. The bank is also interested in hiring Indigenous capital-markets talent from Cedar Leaf Capital, she added.
Indigenous communities, which have long grappled with underinvestment and lack of access to financial resources, expect to receive large amounts of money in the coming years.
In November, for example, Canada Infrastructure Bank announced a program to help First Nation, Métis and Inuit communities buy equity ownership stakes in projects in their traditional territories. In recent years, the federal government struck a $20-billion settlement over discrimination in the Indigenous child-welfare system, and the federal and Ontario governments and the 21 Robinson Huron First Nations reached a $10-billion proposed settlement over unpaid annuities.
Mr. Davis joined Scotiabank’s global banking and markets division as a senior adviser in June, 2023. An Inuk from Labrador, he has spent more than 20 years working with financial institutions and Indigenous organizations. He previously led Indigenous banking teams at Toronto-Dominion Bank and Bank of Montreal.
Nch’ḵay̓ Development Corporation was established in 2018 as the economic development arm of the Squamish Nation, and is currently involved in a housing project in Vancouver to build more than 6,000 rental homes and 1,200 affordable residences. The Chippewas of Rama First Nation was chosen as the site of Casino Rama Resort in 1994.
Since its creation in 1991, Des Nedhe Financial has worked on creating sustainable employment and business opportunities in the English River First Nation. Des Nedhe Group CEO Sean Willy said that typically these three Indigenous groups located in disparate locations across Canada would not have had the opportunity to work together, and the dealer will help “break down barriers to get in the financial sector.”
“It’s where our young people are going in education now. They want to do more than just be in the resource industry or the service industry,” Mr. Willy said. “This opens up further doors down the line for our own source revenue creation and job generation.”
Stefanie Marotta