Scotiabank ready to expand local footprint
Scotiabank de Puerto Rico’s successful takeover of R-G Premier bank’s failed assets some 15 months ago was “the best decision” the institution could have made, as it has increased its customer base tenfold and opened the door to expanding its footprint, high-ranking officials said during a roundtable discussion with members of the local media.
Peter Bessey, who will officially take over as CEO of the local Scotiabank operation July 18, said the focus now is to take the Canadian institution’s already strong reputation as a corporate and commercial bank and expand it across the island’s regional small business network.
“Our commitment is to create and deliver innovative banking services to facilitate financial planning for all our customers. In this case we have in mind commercial customers, whether corporate sector or small businesses and professionals,” said Bessey, who since being named to succeed Troy Wright, the executive who steered Scotiabank through last year’s acquisition, has met with many customers and key business people to get a sense of the market.
“We see some very strong opportunities to expand our presence in the small business market. When we look at the economy and the challenges that Puerto Rico faces, particularly with the high unemployment rate, everybody knows that the next generation of jobs is going to come from the small business segment, which will crate two, three or five jobs at a time,” he noted.
That said, Bessey noted Scotiabank is positioning itself to “be a better bank” for that segment, by introducing services that will help it move forward.
Thriving corporate division
Diego Masola, vice president of commercial and corporate banking, explained Scotiabank’s corporate division has produced favorable results in the last year, including $900 million in new loan originations.
The division currently splits its loan business into loans of up to $1 million, which are processed at its branches, between $1 million and $10 million, processed at its Piñero Avenue headquarters and more than $10 million, managed by the corporate department in the same building.
That division is where the alternatives are to serve both its “top market” customers and its small business customer base, Masola said, adding that going from 60,000 to 600,000 customers since its acquisition of R-G in 2010 enables the bank to now offer new products and services previously unavailable.
“We can now afford to bring products and services that we have in other countries, like Mexico, Peru and Chile, because now it is cost-efficient to share them with a broader customer base,” Masola said.
For example, he said the local bank is tapping into the resources provided through its ScotiaCapital division in New York to import some of their expertise in the debt market, syndicated loans, bond issues or equity raises to better serve specific industries.
“These are very powerful tools. Puerto Rico has a very challenging two or three years in front of us and to improve the economy and finally bring the positive GDP numbers to the table,” Masola said. “We’re on the right path, and for that we want to collaborate and help achieve that objective.”
While the bank is zeroing in on the small- and mid-sized sector, that’s not to say that it is taking away its attention from its larger corporate and commercial clients.
“We see huge opportunities in the cash management side, where we can bring a full suite of technology to benefit that segment,” Bessey noted.
Commitment is in the checkbook
“Scotiabank is committed to Puerto Rico and we demonstrated that with our checkbook, buy buying R-G and integrating it into our operation,” he said, mentioning the bank’s current payroll now covers 1,800 employees.
“One of the things that I noticed, and I’ve been involved with integrations in the past, is that the management team has brought both banks together as one and did it very carefully, and that’s a challenging thing to do,” he said.
Scotiabank has 46 branches islandwide, including those still operating under the R-G brand. However, Bessey said there are still areas of opportunity where Scotiabank would like to have presence, including the Condado sector of San Juan and Ponce. The financial institution is also analyzing where its clients “like and want” to bank, to pump money into those branches. He mentioned, for instance, a need to revamp its Plaza las Américas location.
For now, Scotiabank will continue running its R-G branches under that name, but eventually it will rebrand them, Bessey said.
“What we had in Scotiabank, pre-merger, was a very strong corporate commercial bank, and now we’ve added to that to now have a significant retail presence with strong opportunities for growth,” the executive noted.
Upon taking over R-G in April 2010, Scotiabank increased its market share of deposits to 10 percent from 8 percent and has held on to its 16 percent market share in the mortgage loan market, Bessey said.