When Scotiabank completed the acquisition of BBVA Chile in 2018 as part of its strategic plan to gain market share in one of its six core markets, a colossal challenge remained: seamlessly integrating the operations of two large banks, with millions of customers, thousands of employees and hundreds of branches between them.
As complex as the task was, it was completed in just 18 months, a record in the Chilean financial industry.
“We executed the fastest and most effective integration process in the history of the Chilean financial market. We were able to continue increasing our market share and profitability while successfully servicing our clients during this period. This was an unprecedented milestone in the local financial industry,” said Francisco Sardón, Executive Vice President and Country Head, Scotiabank Chile.
That accomplishment has now been recognized by Euromoney, a London-based magazine for the banking industry. Scotiabank has won two Euromoney Awards for Excellence 2020: Latin America’s Best Bank Transformation and Chile’s Best Bank.
Scotiabank entered Chile in 1991 when it bought a stake in Banco Sud Americano, which it later increased. It later merged with Banco del Desarollo in 2009 to become Scotiabank Chile.
In 2015 Scotiabank set on a course to increase its presence in Chile. Two strategic acquisitions were key: one, a controlling stake in credit card company Cencosud, which brought with it the potential to add two million customers to Scotiabank Chile’s existing client base; and the acquisition of BBVA, which stands for Banco Bilbao Vizcaya Argentaria, which doubled Scotiabank’s market share in one of the fastest growing countries in Latin America.
“We made a conscious decision to gain scale in order to position the Bank for increasing profitability in a consistent way for the future,” Sardon said at the Bank’s 2020 Investor Day in Santiago this past January.
The acquisitions paid off. By the end of 2019, Scotiabank had become Chile’s third-largest private-sector bank by loans and fifth by deposits. The Bank now has more than three million customers, 9,000 employees and 160 branches in the country.
“Our acquisition of BBVA Chile has helped position us to achieve even more in the future,” said Nacho Deschamps, Group Head, International Banking and Digital Transformation. “This successful integration means that we are able to bring the benefits of scale and digital assets to deliver an even better banking experience to our customers.”
Ramping up its business in Chile was part of a longer-term plan to reposition Scotiabank’s geographic footprint in the Americas and improve its business mix. In the past six years, the Bank exited a number of businesses and countries while increasing investments in six core markets — Canada, the United States, and the Pacific Alliance countries of Mexico, Peru, Chile and Colombia — which now represent 87% of earnings. All are high-quality, stable democracies with strong institutions, open economies and free trade agreements.
“Chile has been one of Latin America’s fastest-growing economies in recent decades thanks to a solid macroeconomic framework, which enabled the country to cushion the effects of a volatile international context and reduce the population living in poverty … from 30% in 2000 to 3.7% in 2017,” the World Bank wrote on its website.
Chile’s economic situation has vastly improved in the last several decades, but there is still room to grow. With interest rates similar to those in the United States, Canada and Europe, Sardon said earlier this year, banks in Chile were able to finance all segments of the population, speeding up growth of the middle class and helping alleviate poverty.
The Bank also focused on improving productivity and digital capabilities, a necessary step in a country that leads the region for digitalization and has a high rate for online banking. The Bank established a Digital Factory in Santiago, one of five across its geographic footprint, allowing for new and customized applications and web page design to move more banking online and improve the digital experience according to local needs.
Much of the success came from the Bank choosing a strong leadership team to run its operations, while seamlessly bringing the two banks together. At the same time the Bank strove for zero attrition of clients and saw an increase of 36 basis points in market share; looked for synergies of $150 million to $180 million and had captured 80% of the synergies by the end of 2019; and is fully compliant with both Chilean and Canadian regulators.
“We pride ourselves on partnerships done well. We understand that partnerships are the foundation of our success. The reputation we have earned as a trusted and reliable partner has enabled us to win new business and better serve our customers,” Porter told shareholders in Scotiabank’s 2019 Annual Report.