A look at the history, mergers and acquisitions of Scotia Capital, ScotiaMcLeod, ScotiaMocatta and Scotia Waterous, divisions of Scotiabank Group that come together to form Scotia Capital Inc.

The Formation of Scotia Capital

Currently representing the global corporate and investment banking, and capital markets business of The Scotiabank Group, Scotia Capital’s beginnings originate with the formation of its parent company, The Bank of Nova Scotia, in 1832. During both the 19th and 20th centuries, The Bank of Nova Scotia opened branches that provided retail services across Canada, the U.S. and overseas. In addition, the bank began to offer corporate banking services during the early 1980s from its New York office. Due to the increase in demand, other branches across Canada and the U.S. began offering corporate banking services.

In 1987, Scotiabank became interested in purchasing McLeod, Young, Weir Co. & Ltd., a leading brokerage firm. On 19 October 1987, the Bank circulated its offer to all the employee shareholders. This offer coincided with a stock market crash and needed to be reworked. On 23 December 1987, the new offer was presented to the employees/owners and on 4 February 1988, the revised offer was accepted. A dispute over deregulation between the federal government and the Ontario and Quebec provincial governments caused a delay in finalizing the deal. On 29 March 1988 the 100% acquisition of McLeod, Young, Weir by BNS was finalized and the company was newly named ScotiaMcLeod Inc.

In 1995, ScotiaMcLeod was formally integrated with The Bank of Nova Scotia’s capital markets business. Due to the amalgamation, the bank felt a new name should be adopted to reflect both the integration of the Global Trading and ScotiaMcLeod operating units. On 1 November 1995, ScotiaMcLeod changed its name to Scotia Capital Markets. In 1997, the new division successfully acquired The Mocatta Group, a long-standing leading dealer in bullion.

As a new structure and approach to the organization was unveiled, Scotia Capital Markets changed its name once again. On 1 November 1999, the division, which combined both the Corporate Banking and Scotia Capital Markets division, was newly named Scotia Capital Incorporated.

In 2000, Grupo Financiero Inverlat S.A., a well-known financial group with over 60 years of experience in the Mexican market, was acquired by the Scotiabank Group. In 2005, an integrated NAFTA Wholesale Banking platform was created under the Scotia Capital marketing banner to optimize the delivery of our capabilities to clients across the region and in June of the same year, Scotiabank acquired Waterous & Co., and merged it with the oil and gas M&A operations of Scotia Capital, to form Scotia Waterous, a powerful global leader in oil and gas M&A. Today, Scotia Capital is the marketing name covering the Scotiabank Group's integrated global corporate and investment banking and capital markets functions.

ScotiaMcLeod

The formation of McLeod Young Weir Co. & Ltd.

The bond dealing firm of McLeod Young Weir & Co. (MYW) was founded as a partnership on 1 February 1921 by four young entrepreneurs: Donald Ivan McLeod; William Ewart Young; James Gordon Weir; and John Henry (Harry) Ratcliffe. The foundation laid by these men was rooted in trust, financial expertise and innovation, strengths that have prevailed ever since.

Donald Ivan McLeod

William Ewart Young

The quartet first met at (then) A.E. Ames & Co. Ltd., and were engaged either directly or indirectly in the sales end of the brokerage industry. With the exception of Ratcliffe, all had been with Ames since approximately 1912. Discussion to form an enterprise initially transpired between McLeod, Young and Weir, who later invited Ratcliffe to join in the formation of the firm. On 1 February 1921, the new partners resigned from A.E. Ames & Co. Ltd., and with a working capital of $23,000 formed a company that would be in business to deal with high-grade bonds.

The firm's first purchase by competitive tender was $350,000 City of Regina 6 percent, 30 year Public School Bonds, which they sold entirely to institutions. They continued to buy high-grade bonds by competitive tender, and the business started to grow as the firm established operations in New York, Montreal, London Ontario, Hamilton and Winnipeg.

John Henry (Harry) Ratcliffe

Col. James Gordon Weir, 1930.

As the Canadian economy developed and the volume of general commercial business expanded, McLeod decided in the late 1920s to branch into the broader field of corporate financing. Their first corporate issue turned out to be a first mortgage bond issue for the Metropolitan Building which was billed as the highest building in the British Empire at 44 Victoria Street, Toronto, Ontario. The company remained relatively unscathed by the 1929 stock market crash as it had confined itself entirely to high-grade bonds and all of their money was tied to the firm. By 1929 the firm's capital had grown to more than $1,300,000.

Within 2 years, however, the situation changed. At that time, the British market was a large market for Canadian securities. When Great Britain decided to abandon the gold standard on September 30, 1931, the effects were devastating and overnight, McLeod, Young, Weir and Co. lost approximately $600,000 on bond holdings in their inventory. As a result, the company merged with two other young firms: Bell, Gouinlock & Co.; and Fry, and Mills, Spence & Co. Ltd., to form a group to bid for government and municipal bonds against the other larger firms like Wood Gundy & Co. and A.E. Ames & Co.. The results were positive as McLeod, Young, Weir and Co. was included in the group of investment dealers appointed by the Bank of Canada to bid on and distribute Government of Canada Treasury Bills. This proved to be a large boost to the business resulting in offices opening across Canada and around the world. Offices were opened in London, England in 1968, Tokyo in 1985, Paris in 1989 and Hong Kong in 1989. During this period, the company also changed its name for a third time to McLeod, Young, Weir Co. & Ltd.

By the 1970s, McLeod, Young, Weir Co. & Ltd. diversified to offer a full range of investment services and in 1979 the company became the first Canadian Investment dealer to follow the lead of the American firms by installing an Automated Data Processing system (ADP). This new system kept track of trade activity and enabled the firm to keep track of client accounts in a quicker and more efficient manner.

In 1982, Shearson Lehman acquired 10% of McLeod, Young, Weir Co. & Ltd. in return for access to their U.S. Research facilities and U.S. Commodities Trading. The remainder of the firm was owned by the employees themselves. In June 1987, Shearson Lehman acquired a total of 30 % interest in the company and Claridge Investments purchased 19.9 % of the company shares with the remaining 50.1 % staying in the hands of the employees. This move increased the company's equity capital from $78 to $210 million.

On 29 March 1988, Scotiabank acquired McLeod, Young, Weir Co. & Ltd. and the company was newly named ScotiaMcLeod Inc. Today, ScotiaMcLeod Inc. is a sub-division of Scotia Capital Incorporated.

ScotiaMocatta

Scotiabank’s Gold Department

ScotiaMoccatta 24k gold coin

With more than a century of expertise in the precious metals field, The Bank of Nova Scotia was, in 1893, the first bank in Canada to import gold from London, England to Chicago, U.S.A., to relieve the stringency caused by the financial panic of that year. The Bank also offered gold loans to mining companies in Canada and around the world, as well as customer services to central banks.

After the Second World War, interest in gold was revived and it began to regain its traditional attraction as a store of value. In 1958, The Bank of Nova Scotia introduced a unique Gold Certificate, designed to purchase and as a transferable receipt for gold held for safekeeping in the Bank's vaults. The Bank also became the first Canadian bank to provide daily quotations for gold. Scotiabank quickly became Canada's largest gold trader, in both certificates and bullion, and with its acquisition of the Mocatta Group on 1 December 1997, Scotiabank has come to be known as “Canada’s gold bank”.

The Mocatta Group

ScotiaMocatta has it beginnings over 300 years ago with Moses Mocatta opening an account with one of London, England's most famous goldsmith bankers, Alderman Edward Backwell, in 1671. Originally from Portugal, the Mocatta family made its way to London, England to deal in diamonds, and to a lesser degree, gold and silver. Upon his death in 1693, Abraham Mocatta, Moses’ son, began to actively run the business. In 1710, Abraham Mocatta acquired a licensed broker's medal on the Royal Exchange and he quickly became the most prominent broker in silver. With the flood of gold being discovered and entering London during the 1720s, The Bank of England appointed Mocatta as their primary broker for the buying and selling of foreign gold, until his retirement in 1750 where he was succeeded first by his son-in-law, Moses de Mattos, and then by his grandson, Abraham de Mattos Mocatta, in 1754.

Throughout the eighteenth century, several individuals became partners in the Mocatta business including: silver and diamond dealer Alexander Isaks Keyser in 1760; Asher Goldsmid, who was married to Mocatta's daughter, in 1779; Abraham de Mattos Mocatta’s sons Moses and Jacob in January 1800; as well as Asher Goldsmid’s sons Issac Lyon and Aaron Asher who became dominant senior partners in 1822. During that period, the business also changed its name to reflect the new partnership that was formed between Mocatta and Goldsmid. Following the death of Keyser in 1779, the Mocatta business was newly named Mocatta & Goldsmid.

By 1840, the Bank of England concluded their exclusive relationship with the firm, opening themselves up to several brokers. In 1864, with the retirement of F.D. Goldsmid and Abraham Mocatta, the 85 year alliance between the two families was broken. At this time, an individual who was not a Mocatta or Goldsmid, Sir Hector Hay assumed leadership of the firm which maintained its original name.

In 1900, descendents of Mocatta and Goldsmid rejoined the partnership. By 1957, the business was acquired by the merchant bank, Hambros Bank and was renamed Mocatta & Goldsmid Limited, with Jock and Edgar Mocatta serving as managing directors. In 1969, Mocatta Metal Corporation was created in New York and through Hambros Bank, Mocatta & Goldsmid took a 50% share. The company intended to trade silver, but dealt in all natural metals.

In May 1973, due to the need for greater financial backing to accommodate the development in bullion trade around the world, the business was sold to the Standard Chartered Bank who took over Mocatta & Goldsmid, London as well as 30% interest in Mocatta Metal Corporation, New York. Also in 1973, The Commercial Metal Company Ltd. was purchased from Hambros and was renamed Mocatta Commercial (MCL). By 1975, Mocatta Hong Kong Ltd. was opened and in the fall of 1982, Mocatta Financiere S.A. in Geneva, Switzerland was opened.

The Formation of ScotiaMocatta

On 1 October 1997, The Scotiabank Group, “Canada’s gold bank”, announced that an agreement was signed to acquire Mocatta Bullion & Base Metals from the Standard Chartered Bank. At the time of the acquisition, Mocatta had 180 employees, 10 offices around the world, a base of approximately 3000 clients, which also owned Iron Mountain, a gold and silver depository in New York State. On 1 December 1997, the acquisition was finalized and the Mocatta operations were absorbed into Scotia Capital Markets to form ScotiaMocatta. Today, ScotiaMocatta helps make Scotiabank Group one of the world’s leading metal trading and bullion banks.

Scotia Waterous

A leading global oil and gas acquisitions and divestitures firm, Waterous & Co. was founded in Calgary, Alberta in 1987 by Jeffrey Waterous. With 75 employees located in offices in Calgary, Denver, Houston, Gibraltar and Singapore, the firm has been employed by at least 24 of the 30 largest private sector oil and gas companies in the world between 2000 and 2002. On 29 June 2005, Scotia Capital acquired Waterous & Co., and formed Scotia Waterous. Combined with Scotia Capital’s oil and gas mergers and acquisitions capabilities and Waterous & Co.’s global financial advisory business, Scotia Waterous has become one of the leading global energy advisory firms in the world.