THE AMERICAS IN A CHANGING GLOBAL ECONOMIC PICTURE:
THE VALUE OF PUBLIC-PRIVATE PARTNERSHIPS
November 20, 2013
Ross Anderson, Vice President
Government Communications, Policy & Research
ross.anderson@scotiabank.com
Outline
•
Scotiabank in the Americas
•
Three forms of partnership
1.
2.
3.
2
Investment
Corporate Social Responsibility
Economic development
•
Focus on consumer & micro finance
•
Thoughts on partnerships
Scotiabank’s footprint
83,000 employees
21 million customers
55 countries
3
Expansion through the crisis
4
Scotiabank in the Americas
Operations
• Largest footprint of any Canadian bank in the
Americas
• Active in Caribbean for 125 years and in Latin
America for more than 40 years
• More than 61,000 employees in 35 countries
• Network of 2,153 branches
• More than 7.3 MM customers
• Leading financial institution in the Americas
providing clients with commercial, corporate,
trade finance, correspondent banking and
investment services
• Established capital market operations and lending
relationships in Brazil, Chile, Costa Rica, Colombia,
Dominican Republic, Jamaica, Mexico, Panama,
Peru, Puerto Rico, Trinidad and Uruguay
• Dedicated emerging markets group, with seasoned
market professionals, providing services related to
emerging market cash bonds, foreign exchange,
interest rate derivatives, credit derivatives,
equities and commodities
• Established global infrastructure platform, with a
strong reputation in the Americas
5
Our focus on the Americas
 Stability
 Growth
 Demographics
 Young demographic
entering the
workforce
 Growing middle class
 Macroeconomic
fundamentals and
strong growth rates
 New and expanding
client base
 Following our
customers
• Good governance and
political stability
• Historical, cultural ties,
trade agreements
• Good political
relationships and
investment
framework
• Effective supervision
and prudential
regulation
 Increased savings and
investment
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Public-private partnerships…
…for economic and social development: tackling poverty,
increasing prosperity and stability
A broader discussion than P3s and long-term project financing, although this
is an important area to develop
Focus today on three forms of partnership that we maintain with the
governments and communities where we operate:
1. Investment
2. Corporate Social Responsibility
3. Economic development
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Partnerships: Investment
Scotiabank’s investments throughout the region are a partnership with
governments, where we bring:
 Strong, deeply rooted risk culture and high standards for corporate
governance
 Prudent, competitive pressure and best practices to credit markets, capital
markets, savings, insurance and retirement
 A focus on making our bank local, whichever market we are in
 Partnerships with local institutions to build incrementally with a long-term
outlook
 An international perspective, to share expertise, develop leaders
 Strong relationships with communities, regulators and governments where
we operate
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Partnerships: Scotiabank CSR
Regional HIV-AIDS Testing Day (ongoing)
 Caribbean Broadcast Media Partnership
on HIV-AIDS and regional ministries of
health to conduct counselling and
confidential testing in select Scotiabank
branches
 In 2013, more than 11,808 people were
tested in the Caribbean, at 183 sites in
21 countries
Scotiabank El Salvador (2012)
 Brock University, the University
Pedagogica of El Salvador and El
Salvador’s Ministry of Education on a
physical education program for children
and youth
 Included themes of conflict resolution,
team work, personal responsibility in
the national curriculum
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 Scotiabank’s global philanthropic plan
 Relevant and responsive at grassroots level
 Focus on education, healthcare, social
services, arts and culture, sports and
environment
 In 2012, more than CAD$53 million
 Scotiabank employees also contributed
more than 500,000 hours of volunteering to
local causes
In the Caribbean and Latin America, the
program focuses primarily on children and
children's causes.
Partnerships: Scotiabank & economic development
“Security is one of our priorities, but the others are creating formal jobs and
reducing poverty. They are all connected.
- Juan Manuel Santos, President of Colombia
Fall 2011
 Those connections provide common cause for the public and private sectors
 Business has a comparative advantage in creating and expanding economic
opportunity
 Recognize there is a double bottom line of positive financial returns and
economic/social benefits
 The poor require a range of financial services: safe, accessible savings; microcredit;
payment services; insurance
 Accessing those services provides huge benefits in terms of security, stability and
leverage for disadvantaged populations
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Financial inclusion and financial services
 In most developing countries access to formal financial services is limited
to 20-50% of the population. These numbers capture not only the poor,
but also the near poor who have difficulty accessing the formal market.
 The banking sector contributes to economic development in four ways:
1. Directly provides economic and social benefits by being a successful business,
employer and corporate citizen
2. Indirectly provides these benefits by enabling other businesses to succeed
through the provision of credit and through the banking system which lowers
transaction costs
3. Directly alleviates poverty and contributes other social benefits by providing
access to basic banking services in a formal market and acting as a force of
inclusion
4. Indirectly provides these benefits by enabling other inclusive businesses and
impact investors through the provision of credit
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Overview of Consumer and Micro-Finance
Micro-finance
Consumer Finance
 Borrowing for working capital, inventory
or other business needs
 Loan size: $1,000-$6,000
 Borrowing to purchase consumer goods
such as furniture & appliances
 Loan size: $300-$2,000
In August 2012, Scotiabank located its segment
management team in Peru, our centre of
expertise on CMF. The team will lead
Scotiabank’s strategic direction in CMF
across our international footprint.
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CrediScotia
Credito Familiar Mexico
 CrediScotia launched in Peru in 2009 and
now services Peru, Chile, Mexico, DR and
Jamaica
 Diversified product suite for microbusiness owners, lending funds for
working capital, acquiring business
premises and buying equipment
 Provides free financial literacy programs
to clients and non-clients



Consumer Finance operation with 246
branches & robust infrastructure
acquired in 2012
Leverages Peru’s CMF expertise
Positioned to serve lower-income
segment:
•
16 million households
Significant share of population & economy
Nearly 50% of LATAM’s +200MM population, and 30% of the
Purchasing Power, is concentrated in this segment
Mexico
Peru
Chile
Colombia
Dominican
Republic
(% of Local Population)
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Affluent
6%
4%
8%
3%
2%
Mass Market
29%
15%
15%
32%
11%
Consumer &
Micro Finance
37%
53%
57%
41%
38%
Unbanked
28%
28%
20%
24%
49%
Total
100%
100%
100%
100%
100%
Additional thoughts on partnerships
Investment climate: Already attractive and mature. Continue to develop strengths by
emphasizing the following:
 Transparency, consultation, legal certainty and dispute settlement
 Don’t compete, do research, fill gaps and graduate to the private sector
 Policy continuity and coordination (regulatory harmonization or mutual
recognition)
Corporate Social Responsibility: Opportunities for better coordination and joint
efforts across governments, NGOs and private sector actors on common causes,
building on the respective strengths of the public and private sector
Inclusive growth: Doesn’t work if it’s high risk, low return:
 CMF is a for-profit, self-funded business – no interest in subsidy but sustainable
profits are necessary for stability and scalability
 High transaction costs coordinating multiple agencies and respective roles
 Market need is in area of risk mitigation
 Invest in infrastructure to facilitate market-formation in the financial sector (e.g.,
secured transactions reform, payments and clearing, risk-sharing)
 Increase capacity for spillover through literacy, training, technical assistance
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