Spotting the gold lining within economic clouds

With the opening of an Istanbul office, Canada's Scotiabank aims to utilize Turkey's strategic position as a "gateway to continents."

Scotiabank will be looking to use its decades-long expertise in the financing trade in Turkey and is especially eyeing up Istanbul's gold market, the third largest in the world.

Speaking to the Hürriyet Daily News & Economic Review Wednesday evening, Alberta G. Cefis, executive vice president for global transaction banking at the Ottawa-based banking giant, said the bank, represented in Istanbul for the last 12 years, saw the volume of its trade financing business quadruple in the last five years. "We see Turkey as a strategic gateway, being at the crossroads of continents. But in itself, it is also a very promising market," she said.

It is Canada's most international bank, according to Cefis, with 69,000 employees in 2,200 branches scattered across 50 countries. With a 120 years of experience in international operations, the bank's first branch outside Canada was opened in 1889 in Kingston, Jamaica, as Scotiabank became involved in financing the rum trade.

Today, it has a strong presence in the Americas and with its operations in ScotiaMocatta, the bank is among global leaders in precious metal trade and financing. In today's volatile environment, Canadian banks have performed surprisingly well, while watching their peers in the United States an Western Europe crumble.

Scotiabank announced its results for the fiscal year 2008, Tuesday, scoring a net income of $3.14 billion. Despite a write-down of $595 million in the fourth quarter ending Dec. 2, partly due to the collapse of Lehman Brothers, the bank's Tier-1 Capital Ratio remains at 9.3 percent, well above its peers. The figure refers to the ratio of a bank's core equity capital to its total risk-weighted assets.

Prudent and conservative
"We do not issue sub-prime loans, we have good regulations and a sound risk management culture," Cefis told the Daily News. "Canadians are prudent and conservative."

The fact that Scotiabank only had a corporate investment banking presence in the United States and no exposure to sub-prime mortgage also helped. "For us, growth should be sustainable," she said, and added Scotiabank resisted pressure from the street to grow continuously and at any cost. "We have to generate growth in a way that does not change risk perception. We have to follow the book of rules."

Scotiabank's Istanbul office will complement its Cairo office, which manages operations in the Middle East. But Turkey is important for the bank, as it aims to complement its presence in countries such as Chile and Peru, which are rich in minerals. As Istanbul is one of the largest gold markets in the world, Cefis said Scotiabank was aiming to bridge the Americas and Turkey in financing precious metals trading. "Trade is in our blood. We are looking for growth beyond borders and are driven by where growth is."