“We are behind in winning primary relationships, with approximately 16% of clients using Scotiabank for their day-to-day banking needs,” he explained.
Following the changes in its strategy, the bank will allocate 90% of its incremental capital to the priority businesses of Canada, the US, Mexico, and the Caribbean. Thomson said that there was an opportunity to tap into the $1.6 trillion in annual trade flows among Canada, the US, and Mexico. The three countries also have higher fee pools which the bank intends to utilize as it aims to reach more capital markets businesses in those areas.
A change in strategy
The Scotiabank CEO said that the bank has lagged behind its competitors when it comes to shareholder returns in the past decade because its loan-to-deposit ratio has been too high. This has meant that it has needed to rely on wholesale funding, which has been more costly.
At the same time, it also had a lower market share compared to its rivals in most product lines other than mortgages and auto loans. It also had fewer deposits and clients per branch.
While it was the Canadian bank with the largest international footprint, its businesses in Latin America had too many clients with only one banking product. Its capital-markets businesses were also declining because of the lower fee pools in the region, the report stated.