Scotiabank should grab some sunscreen and an RV, as it’s the latest of Canada’s big banks to act like a snowbird.
What happened: Scotiabank is investing US$2.8 billion into U.S. regional bank owner KeyCorp for a 14.9% ownership stake. KeyCorp has around 1,000 KeyBank branches in 15 states with $187 billion in assets, primarily offering commercial and retail services.
Catch-up: Scotiabank has long had a strong presence in Latin America and the Caribbean, but has no real retail presence in the U.S. Last year, CEO Scott Thomson proclaimed the bank would shift focus onto the more profitable North America.
Why it matters: It’s no secret Canada’s big banks have achieved total dominance in their home market, which has led them to look elsewhere for growth. The U.S. has become the hot spot due to its large population and relatively looser regulatory environment.
- From BMO’s $16.3 billion purchase of Bank of the West to TD’s $1.3 billion buy of investment bank Cowen, these banks are spending like mad to make headway.
Big picture: Other big Canadian banks have already carved out niches in the U.S. For example, BMO focuses on commercial lending while RBC does wealth management. Scotia’s KeyCorp deal will see it muscling in on TD’s American territory: retail banking.—QH