Scotiabank is restructuring its Latin American operations to boost performance, focusing on Brazil as a growth market alongside Mexico. The bank aims to transition from a credit-focused strategy to a customer-centric approach that integrates services across countries. Key changes include standardizing client segmentation and expanding product offerings in Brazil, amid optimism for future growth despite existing economic challenges.
Scotiabank, a prominent Canadian financial institution, is embarking on a restructuring of its Latin American operations due to previous underperformance. While the bank is relatively unknown in Brazil, it has established a robust retail presence in other regional markets. Under the new leadership of CEO Scott Thomson, who assumed office in 2023, the primary focus will shift towards Mexico, which is strategically integrated with Scotiabank’s Canadian and U.S. divisions. However, the bank also acknowledges growth potential in Brazil and plans to capitalize on opportunities in this market.
In early January, Scotiabank finalized an agreement to divest its operations in Colombia, Costa Rica, and Panama to Colombian banking institution Davivienda, in exchange for a 20% stake in the combined entity. Last year, the bank sold its consumer finance subsidiary, CrediScotia Financiera, in Peru and is contemplating similar actions regarding its Chilean operations. According to Francisco Aristeguieta, head of the bank’s international division, years 2024 and 2025 will be transformational as the bank shifts from a credit-focused model to a more customer-centric strategy, enhancing primary client relationships.
The international division, now overseeing 12.5 million clients across 35 countries, will see operations increasingly interconnected rather than functioning independently. This evolution includes an initiative to categorize clients by their income levels, a step that was previously non-existent. Aristeguieta acknowledged, “We are standardizing client segmentation and procedures, developing a new platform, and all this takes time,” highlighting the ongoing development of a shared management portal for cash transactions, trade finance, and related services across various countries.
While the potential sale of the consumer finance division in Chile is under consideration, sweeping changes in Latin American operations are not expected. Scotiabank aims to leverage its diverse presence across multiple nations to provide integrated services that enhance client experience, with a particular emphasis on services for clients operating in Brazil. Aristeguieta stated, “Not having this piece of the puzzle would be problematic. We still do less in Brazil, but there’s room for more.”
Brazil represents about 20% of Scotiabank’s Latin American results and 9% of its global outcomes in the wholesale banking sector. Furthermore, Aristeguieta believes Brazil stands to gain from shifts in global supply chains as it competes with China, stating, “I see no reason why it can’t compete in this scenario.” He recognizes Brazil’s long-term growth prospects, even amidst short-term challenges such as its fiscal situation, which requires attention to support sustainable economic performance.
Scotiabank Brazil’s CEO, Paulo Bernardo, reported earnings of $240 million in 2024, following a record performance of $265 million in 2023. During this period, the bank effectively navigated challenges that affected competitors, such as the crisis of the Americanas department store. The objective is to enhance product offerings, including the establishment of an equity capital markets sector and a local debt capital markets division to engage more comprehensively with clients.
The Brazilian operations aim to develop a competitive cash management platform while also expanding the range of derivatives offered. Bernardo commented, “My game is the long-term game. I believe being in the local debt market is essential for a bank to have a more comprehensive conversation with its clients.” He emphasized the importance of forming relationships with clients who demonstrate engagement and reciprocity.
Looking to the future, Bernardo recognizes that 2025 may present challenges, particularly as corporations prioritize debt refinancing over new investments. However, he still sees substantial opportunities within the local market regarding corporate relationships and capital markets. “I think the local market presents opportunities, whether in corporate relationships or in the capital markets,” he stated, demonstrating optimism in Scotiabank’s trajectory in Brazil.
In summary, Scotiabank is committed to restructuring its operations in Latin America, with a strong emphasis on enhancing its presence in Brazil. The bank aims to leverage interconnected services across the region while focusing on customer-centric strategies. Brazil remains a key component of Scotiabank’s growth plan, with projections for increased earnings and significant investments in local operations. Despite facing challenges, there is optimism for future growth in the region.
Original Source: valorinternational.globo.com
