An address by Richard E. Waugh
President and
Chief Executive Officer Scotiabank

Convocation Address to the Schulich School of Business York University

Toronto, Ontario

Friday, June 15, 2007

"Embrace the world with humble confidence – even if it feels outside your comfort zone – and I promise you will never be sorry you did."

Check Against Delivery

It’s a real pleasure to be here, and let me start by congratulating all of you. It’s a tremendous accomplishment to graduate.

There’s a lot of sacrifice involved in reaching this goal – financially, and in terms of your time and commitments. But it is truly worth it – and you should be very proud.

And you are graduating from one of the finest schools in the country. I know, because I graduated from here.

I’d like to thank York University and the Schulich School of Business for educating me and equipping me to be in a position to receive this great honour.

I have tremendous respect for the school – for York and Schulich – for the faculty – and for the quality of the students. In fact, there are many, many graduates who are now colleagues of mine at Scotiabank – which is proof of the value of this institution.

I’ve been asked from the perspective of my own career to share with you my thoughts on the future of Canadian business – a future all of you will hopefully play a big part in creating.

In this room, I know there are many potential leaders. If you want to succeed, my advice to you is simple – work hard, have a global perspective, and tackle the world with what I would call a humble confidence.

I also think Canadian businesses, to be successful, should share a global vision and tackle the world with humble confidence – hopefully, you’ll provide some of the leadership to help them do so.

So, embrace the world – even if it feels a little uncomfortable. By that, I mean all of us need to recognize, accept and live as important members of a global community, with its challenges, its opportunities, and its risks.

All of us – all of you – have a role to play in helping to make Canada a leader in the global economy. Globalization is our reality. Embrace it.

I mention this in the context of the unfortunate growing trend, where we are seeing some of Canada’s best companies being acquired by massive, foreign firms. And the questions this raises about the hollowing out of corporate Canada which are legitimate and need to be debated as a priority for our country.

It’s not surprising that some major Canadian businesses are being bought by some big foreign companies. We have some great companies.

We have some incredibly dynamic industries, in natural resources, transportation and telecommunications, financial services, manufacturing and more.

Large international firms look at Canada, as they do throughout the world, and recognize the value of our firms – and, in a free and open global world, are attracted to invest and do business.

This seems like a good thing. So, why should this raise concerns – given that investment goes both ways?

Let’s look at the aggregate picture.

KPMG put out a news release about a month ago, adding up the number of mergers and acquisitions done in 2005 and 2006 involving Canadian businesses.

In that period, Canadian companies, as buyers, spent US$51 billion. But foreign firms spent US$99 billion – twice as much – buying Canadian companies.

From this perspective, this is what globalization is all about: global firms seeing the value and buying Canada. Again, why should this be a concern?

Because there is an imbalance in the numbers and in qualitative terms.

Because we are selling something more than just an asset.

It matters because large, successful Canadian businesses with head offices in Canada are an important foundation of our economy and make big contributions to our lives in ways we don’t always recognize.

And to share my bias – if it’s not already obvious – I’m a big believer in strong Canadian companies, growing internationally and headquartered here in Canada.

Not coincidentally, that’s exactly what Scotiabank is: we’re a large Canadian company, celebrating our 175th year in business.

We’re Canada’s most international bank – we’re in some 50 countries around the world. We’re the dominant bank in the Caribbean. In fact, we opened a branch in Kingston, Jamaica, before we opened one here in Toronto – that was almost 120 years ago.

We’re a major bank in Mexico – with almost 500 branches. We’re number three in Peru. We have large branch networks throughout Central America. And we’ve made more investments in China and Thailand. We have more than 58,000 employees worldwide – of these, more than 20,000 speak Spanish as their first language.

Our international approach of a strong Canadian company with an international focus has delivered great results.

In terms of performance, Scotiabank ranked number one in North America and number two in the world over the past three, five and 10 years in total returns to shareholders.

But, coming back to my point, to me, it’s obvious we need large, successful global Canadian corporations.

Now why should this matter to all of you?

There are several important reasons.

Most important, Canadian companies create opportunities for our young people – all of you – to pursue careers and develop strong business skills. I like the fact that at Scotiabank, there are hundreds of people working in our head office dedicated to growing our business in international markets, as well as working in great jobs around the world.

Businesses with head offices in cities like Toronto or Montreal or Calgary or Vancouver support a lot of smaller and professional businesses, hiring law firms, ad agencies and a huge range of other Canadian-based suppliers and professionals.

All of which create dynamic opportunities and careers for young people – and great business opportunities for our suppliers.

Head office jobs are where the decisions are made – decisions that can have a significant impact on our economy and our future.

It’s where we develop much of our top management talent – our future talent. It helps to be where the decisions are made to truly participate in the decision making to learn and find out how to grow a business, which is key to any company’s success.

And head offices give a lot of money back to their local communities. Scotiabank donated $42 million last year – the lion’s share of it here in Canada, even though we generate just over half our earnings in Canada.

Equally important, our employees – many of them in head office – give generously of their time and money to the community.

So I like the idea of Canadian companies going out and succeeding and winning globally and growing head offices and jobs here at home. It’s a win, win, win for shareholders, employees, customers and the community.

And, if we want to be buyers instead of being bought in a global economy, we need Canadian businesses and our governments to be committed to growing businesses both at home and abroad.

We need to focus on being the best, the most innovative, making long-term investments in technology and people to enhance our productivity. And we need to focus on growing beyond Canada.

You can’t defend yourself by building walls. I disagree with some other CEOs on this point. I don’t advocate protection. The only defence in a global world is a good offence.

We don’t need governments to subsidize or protect business. But we do need governments to recognize what sectors of our economy are strategic to Canada, what our competitive strengths are, and help us to fully develop these strengths. It’s not about protection – just the opposite.

Government needs to look at the cost/ benefit of regulations and their impact on our competitiveness.

They need to ensure that our regulatory frameworks, which include effective tax regimes, don’t penalize us.

Government needs to continue to ensure we have strong trade policies – with access to markets to ensure our leading industries are able to grow in size and scale to take on the world.

Our laws need to allow companies, their directors and management, to pursue a company’s long-term interests, to follow the principles of sound business judgement.

This is necessary so that Canadian companies can pursue strategies for the benefit of all stakeholders – the shareholders, employees, customers and the community.

While it’s important to look at the needs of all stakeholders – this does not mean prohibitions or false targets or ownership limits.

And we need more schools like Schulich and York that take a global focus on developing the brightest and most talented leaders – all of you – who can help Canada and Canadians lead in the world.

Just as Canadian businesses need to grow – to look beyond Canada – and to look to be the best in the world – so should all of you. And you need to have a truly global perspective.

Now, I’ve had the pleasure of building a career for more than 35 years, with only one employer – Scotiabank. What successes I’ve had are due in large part to being associated with a great, multinational and global company, and most importantly, great people at Scotiabank who share common goals and values.

I was hired, right out of the University of Manitoba with an Honours Bachelor of Commerce. I was fortunate to have a few offers, including one from Scotiabank. But I also wanted to travel – and go to Europe.

I didn’t have much money and I knew I needed to come back to a job, particularly I wanted to stay in Winnipeg.

So, I went all through Europe, hitch-hiked, back-packed and came back broke. I saw that there was a world beyond Winnipeg, beyond Canada, but came back and took up the offer from Scotiabank at our Windsor Park branch, a suburb of Winnipeg.

After only a few months after I started work, Scotiabank transferred me to Toronto, where I went to night school to get my MBA from York (now Schulich).

Later, after several challenging assignments in Toronto, I moved to New York – and then travelled to some 50 countries around the world when I headed up the Bank’s growing international operations. I learned first-hand that the world is full of opportunities.

But if you can do that working for a Canadian company like Scotiabank, with great vision, values and people, that’s the greatest experience.

It provides you with the best of both worlds. I could live in this great country and work with a Bank that is recognized as a world leader with branches and offices in some 50 countries.

It’s been rewarding to me, and hopefully our bank, great for my family and hopefully we’ve all contributed to Canada and Toronto.

The one trend that has been present throughout my career has been globalization. The realities of globalization are what all of you will be dealing with, almost regardless of the direction you take.

Our future, and your future, should be about helping to create a strong Canada in a globally connected world.

I’d like to end by quoting Mark Twain who said:

Twenty years from now you will be more disappointed by the things that you didn't do, than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.

Ladies and gentlemen, embrace the world with humble confidence – even if it feels outside your comfort zone – and I promise you – you will never be sorry you did.

Congratulations everyone! Have a great graduation experience. And thank you.