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(Domenic Macri/Domenic Macri)
(Domenic Macri/Domenic Macri)

Colombia is Canada's new best friend Add to ...

It was just after daybreak on a hazy January morning in Bogota and the 300 bankers were bleary. Summoned at dawn to the auditorium at the foot of their 50-storey office tower, most of them had guessed that their employer—Eduardo Pacheco, owner of Banco Colpatria—was about to confirm the closing of a deal. And no small deal. Canada’s Scotiabank, they understood, was taking a controlling stake in Colpatria. But how did this explain the monstrous transgression against bankers’ hours? Was this really the right time and place for a lesson in Canadian banking history stretching all the way back to the 19th-century rum trade?

Rick Waugh, Scotiabank’s CEO, seemed to think it was. After all, the acquisition of Colombia’s fifth-largest bank would be a major step in his expansion strategy, and would rank close to being Scotia’s largest-ever foreign acquisition. Waugh had come prepared with a well-rehearsed presentation and a feel-good video replete with romantic imagery. “We’re getting married,” cooed Waugh as he launched the talk. “And then we’ll be on a honeymoon for a while.”

With Scotia’s total assets of $594 billion and a 2011 return on equity of 20.3%, Waugh was in a position to make any prospective father-in-law happy. “We are called the safest bank in the world,” he boasted, “and we have the lowest loan loss of our peer group in Canada.” And Canada—“probably the richest country in the G7”—is a good place to come from, added a subordinate flanking him. But the most pertinent fact of all came next, as Waugh described a $10-billion series of 22 acquisitions since the 2008 financial crisis—many of them in emerging markets like China, Thailand and Chile. The spree has transformed Scotia into a truly international banker, with operations in 55 nations and a heavyweight status in Latin America. While most of the banking community back in Canada continues to fight over a mature domestic market and obsess over halting progress in the United States, Scotia has been busily going global. “Our aim is to have half of our business in Canada and half internationally on a net income basis,” Waugh explained. Indeed, more than half of the bank’s 75,000 head count is already based outside Canada.

But isn’t Colombia run by drug cartels?

That is an idea that both Scotia and Colpatria are keen to dispel. After 50 years of civil war driven by ideological clashes and cocaine profits, peace is spreading in Colombia, which is South America’s oldest democracy. According to the World Bank, Colombia is the most secure country in Latin America in which to do business. In recent years, Colombia’s economy, which is Latin America’s fifth-largest, has grown four times as rapidly as Canada’s; foreign investment quadrupled between 2002 and 2008. In Waugh’s view, these trends are likely to continue as Colombia’s huge and until-now largely untouched natural resources are developed with capital from the likes of, well, Scotiabank.

Waugh is not acting alone. In fact, there’s a Canadian invasion under way in Colombia. If Waugh is the general in command today, his flanks are well covered by two others—the Toronto Stock Exchange, which provides capital for a raft of Colombian mining and energy companies that are ramping up exploration and production; and the government of Stephen Harper, for whom a new trade deal with Colombia is a key step—albeit a somewhat symbolic one—in the diversification of Canada’s exports and investment into emerging markets.

“Colombia is very important to us,” Waugh emphasized as he wrapped up his speech. “Sometimes on Wall Street they seem to think all the countries of the world are the same. But we know they are not.”

And with that, Waugh buttoned up his jacket and headed off with Pacheco to meet the President.


On a beautiful early September afternoon last year, Father José Reinel Restrepo shuttered the windows of his church in the central Colombian village of Marmato, walked out to the village square, mounted his small motorcycle and puttered down the tortuously steep mountain road. He was on his way to visit family in a nearby city—a welcome respite from the highly charged atmosphere in Marmato.

On his way down the mountain, the 36-year-old priest passed a series of small gold mines where many from the village gain their livelihoods. For better and worse, gold defines the 500-year-old community. Although it’s tiny and remote, Marmato is emblematic of President Juan Manuel Santos’s vision for economic renewal. Santos’s government backs a plan by a Toronto-based company, Gran Colombia Gold Corp., to modernize gold extraction in Marmato—by moving the village to make way for an open-pit mine.

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