Jon Erlichman

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Scotiabank CEO Scott Thomson has laid out a new plan for the bank that includes a fresh focus on the company’s Canadian operations.

“There is real opportunity to gain our fair share in Canada as we reallocate capital back to North America,” he told me in an exclusive television interview with BNN Bloomberg on Thursday.

Thomson, who became CEO in February, unveiled his broader strategy on Wednesday as part of the bank’s much-anticipated investor day.

At the heart of his plan is a desire to boost the bank’s profit by better connecting its business here at home with Scotiabank’s banking units in the United States and Mexico, while shifting some capital away from the company’s broader Latin American businesses.

“We’ve got a great Canadian platform. We’ve got a great international platform. But there’s not a lot of connectivity between those two platforms,” Thomson said.

LOAN LOSS PROVISIONS

Scotia’s new roadmap follows the bank’s recent quarterly results, which included higher-than-expected provisions for potentially bad loans in the face of economic uncertainty.

“It was important for us as a team to make sure, coming into this new strategy, that we had the balance sheet in great shape,” Thomson added.

CANADIAN GROWTH OPPORTUNITIES

While he highlighted Scotiabank’s strength in Canadian mortgages and auto lending, Thomson sees an opportunity to grow in areas such as small business lending, commercial banking and wealth management through Scotia’s network of bank branches.

Two brands Thomson is eying for strong growth potential include the digital bank Tangerine and the loyalty program Scene+, which Scotia operates in partnership with Cineplex and Empire Company.

Thomson, who previously served as CEO of Vancouver-based Finning International, also sees regional growth opportunities in provinces such as British Columbia and Quebec.

‘CREATING CONNECTIVITY’ BETWEEN CANADA, THE U.S. AND MEXICO

All that said, Canada is just part of the strategy, which will increasingly shine a spotlight on Scotia’s business in the United States.

“I don’t think people realize that 10 per cent of our net income already comes from the U.S.  We’re the tenth-largest foreign banking organization in the U.S., so it has been a big part of the bank,” Thomson said.

“As I think about connecting these platforms, the U.S. provides a great opportunity for us to do that.”

Meanwhile, Scotiabank operates a top-five bank in Mexico, with many of Scotia’s commercial clients in that country also dealing frequently in the U.S.

He sees all of this connective tissue as a North American competitive advantage for Scotia.

“That megatrend of Canada, U.S. and Mexico is real.  The amount of trade flows that we’re seeing between those three countries is significant,” said Thomson, who recently returned from Mexico City.

Geopolitical tensions are playing a role in boosting the North American opportunity, he added.

“The amount of capital that’s coming from China to Mexico on the back of nearshoring is material,” he said.

“Similar to what you’re seeing with the pipelines and with the rail companies, there’s an increasing interest in creating that connectivity across those three countries.”