With next year's one to two-and-a-half percent economic growth forecast for The Bahamas, Scotiabank (Bahamas) Limited is gearing up for a competitive 2012 with increased wealth management services in its plans for meeting shareholder expectations. Four months into his Bahamian tour-of-duty, Scotiabank's new managing director, Kevin Teslyk, sat with media yesterday, sharing some of Scotiabank's broad economic projections for The Bahamas and how the bank planned to make the most of them.
The bank is hoping to outperform next year's forecasts for the macro-economy, Teslyk adding that augurs well for the consumer. "I think its fair to say expectations are going to be that gross domestic product (GDP) in The Bahamas is going to grow anywhere between one-to-two, two-and-a-half percent, somewhere in that range," Teslyk said. "So much of the growth is going to have to come from within the industry. "That's good news for the consumer. It means competition is going to be very prevalent, very heated."
The projections for GDP growth were based on a broad consensus from the government and the Central Bank of The Bahamas, Teslyk said, adding that it was still subject to developments in Europe. A debt crisis there continues to threaten to freeze financial markets and bring on a second round of recession, the U.S. and The Bahamas likely following in its wake. As Europe suffers through a debt crisis, however, Bahamian banks are suffering from strong liquidity levels. There is less demand for credit, Teslyk said, meaning some banks are seeking out new growth opportunities.
With a loan book in excess of $1 billion, according to Teslyk, Scotiabank is turning to its depth of wealth management and private banking expertise as relatively undeveloped streams with significant growth potential. "The private banking [arm], what we call Scotia Private Client Group - we see lots of opportunity in that business segment," Teslyk said. "[It's] one that, in The Bahamas, Scotia is still relatively new to compared to its peers, but we've got lots of capability, global capability, products and services, ideas and solutions ..."
The potential Scotiabank is seeing is not only from international high net worth individuals, but as The Bahamas is one of the richer nations in this region, from a GDP per capita perspective, the bank will aim to build local high net worth client relationships as well. "The Bahamas is on the higher end compared to many other countries in the region and I think it behooves us to bring in an additional element of choice or alternative to the marketplace in an area that just has not been a key area of focus in the last five/six years," Teslyk said.
Thus far the private client group is enjoying early success with its focus on offshore and Bahamian onshore opportunities, the managing director said. After the bank's acquisition of BNP Paribas (Bahamas) assets in April 2010, the bank added to Scotia's existing wealth management expertise. They likely will not need new hires in the near future to achieve its greater wealth management focus.
Across the region, jurisdictions have been targeting the offshore international financial services markets, Teslyk saying The Bahamas was "arguably the biggest, deepest, and most sophisticated" with the Cayman Islands, Barbados and Bermuda "in that mix". Many of those jurisdictions are 'reinventing' themselves, according to Teslyk, to take advantage of their core strengths and develop new opportunities. Scotia sees those opportunities too and intends to leverage its own strengths to take advantage of them.
Some banks locally have turned to adjusting the composition of their loan portfolios to get better returns, albeit often resulting in a riskier portfolio. But Teslyk said Scotia's portfolio was balanced just where it needed to be with consumer, small business, commercial and corporate streams. "We've always been a personal and commercial bank predominantly for well over 100 years in this region and 50 years in The Bahamas," Teslyk said.
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