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Scotiabank Analysis

Scotiabank Analysis

Executive Summary This report provides an analysis and evaluation of the Bank of Nova Scotia’s primary business operations including their marketing and information technology (IT) systems and the company’s overall financial status and profitability. The methods of analysis used include secondary research of industry data, company reports, recent financial disclosures, as well as inquiries in various electronic databases. The purpose of this report is to determine whether or not the Bank of Nova Scotia, more commonly known as Scotiabank, is a good employer for recent and future Haskayne School of Business graduates.

Extensive research has determined that the banking industry is in an unstable state. The industry’s profits have declined over the last few years mainly as a result of bad debt resulting from the US subprime issues as well as the recent global economic downturn. With many competitors, competition has increased in recent years to attract younger customers who historically have less loyalty towards banks. Scotiabank is Canada’s most international bank as well as a major player in the international banking industry.

Their mission is to provide exceptional products and services to their clients around the world in addition to the general business goal of earning a profit. The company targets the major markets with their Canadian Banking, International Banking, and Scotia Capital segments. Scotiabank incorporates sophisticated technology in their operations systems in order to provide exceptional customer service as well as reliable accurate services. This technology is used effectively in bridging the gap between customers and branches spread out around the globe.

Scotiabank offers various banking and financial products and services to individuals as well as businesses. The services offered are partly determined by consumer preferences as well as other internal and external factors. The societies in which they operate reap significant financial benefits as well as non-financial benefits such as community building activities. Scotiabank has consistently met their profit targets over recent years despite the economic downturn.

Although it will be challenging, the Bank remains optimistic about maintaining their profit targets for 2009. With many recent acquisitions, Scotiabank has a major foothold in the industry and should see both short-term and long-term growth in the future. Research indicates that Scotiabank is responding to the corporate social and environmental responsibility movements. They have altered their businesses practices in order to be more responsible as well as to cut costs and ensure their company’s continuing presence in the market.

It is their corporate social responsible attitudes and ability to adapt to changing markets which contribute to their financial success year after year. Considering all of these factors, Scotiabank is an attractive company for recent and future University of Calgary and Haskayne School of Business graduates to work for and learn from. Table of Contents Objective/Methodology …………………………………………………………………………. 1 Company Introduction …………………………………………………………………………. 1 Overview and Industry…………………………………………………………………. 1 Stakeholders………………………………………………………………………………. 1 Target Market …………………………………………………………………………….. 2 Government Impacts………………………………………………………………………3 Marketing and Operations Management ………………………………….. …………………. 4 Products and Services…………………………………………………………………….. 4 Quality Assurance…………………………………………………………………………4 Determining Factors………………………………………………………………………5 Benefits to Society…………………………………………………………………… ……5 Mergers and Acquisitions…………………………………………………………………6 Role of Technology………………………………………………………………………. 6

Corporate Social Responsibility………………………………………………………………… 6 Ethical and Responsible Actions…………………………………………………………. 6 Recent Issues……………………………………………………………………………….. ……. 7 Recent Company Issues…………………………………………………………………… 7 Recent Issues in Industry…………………………………………………………………. 8 Financials ………………………………………………………………………………………… 9 Recent Performance………………………………………………………………………. 9 Internal Factors……………………………………………………………………….. ….. 9 External Factors …………………………………………………………………………. 10 Conclusion ……………………………………………………………………………………… 10

Appendices ……………………………………………………………………………………… 11 Appendix A –Excerpt from the Bank Act of Canada…… ……………………………….. 11 Appendix B – Recent Mergers and Acquisitions …………… ………………….. ………. 17 Appendix C – Financials & Ratios……….. ………………………………………….. …18 Appendix D – Social Investment Profile … …………………………………… …………. 24 References ………………………….. ………………………………………………………….. 35 Objective/Methodology This report summarizes the research, findings, and conclusions conducted by BSEN 291 students as a core requirement of their course.

The objective of this report is to analyze and evaluate Scotiabank’s primary business activities and financial data to determine whether or not it would be a good employer of recent University of Calgary graduates. This report includes sections such as company introduction, marketing and operations management, corporate social responsibility and recent issues, and financial information. The research methodologies for this report include secondary research from databases, such as SEDAR, Mint Global, and Canadian Newsstand, as well as research conducted on the World Wide Web.

Group members applied their knowledge from lectures and labs in order to analyze the sources and extract and interpret the relevant data. Company Introduction Scotiabank is classified in the Canadian banking industry and other banking industries worldwide. The Canadian banking industry is comprised of 13 domestic banks, 34 foreign bank subsidiaries, and 11 foreign bank branches operating in Canada (Department of Finance Canada, 2001). In recent times, the banking industry has become unstable as a result of the US subprime crisis and Canadian banks have not been immune.

Since the second half of 2007, major central banks injected record amounts of cash to calm the credit markets and prevent a complete meltdown in the financial system (Mergent Inc. , 2008). Since its incorporation in 1832, Scotiabank has risen to be Canada’s most international bank and one of North America’s leading financial institutions (Mint Global, 2008). Through a team of over 69,000 employees, the Bank and its affiliates offer a broad range of products and services, including personal, commercial, corporate, and investment banking, to more than 12. million customers in some 50 countries around the world (Scotiabank Annual Report, 2008). Scotiabank has many stakeholders, the two primary ones are the shareholders and employees. The main concerns of the Bank’s employees include a healthy work environment, competitive compensation, and equality in the workplace. In order to address these issues, Scotiabank Group developed the Scotiabank Chain of Communication. This set of guidelines provides an outlet for employees to address their concerns without fear of retaliatory actions against them (Scotiabank, n. . ). For example, as a result of compensation concerns, the Bank has now changed its reward policy towards employees to include incentive pay, employee share ownership, pension plans, and employee benefits (Scotiabank, n. d. ). Respecting diversity and keeping its employees content, Scotiabank develop a competitive advantage in the industry. Shareholders comprise Scotiabank’s second stakeholder group. Their primary concerns include stable financial and operational growth, as well as legal and responsible business practices.

To address these issues, the Bank publishes an annual report allowing its shareholders to see the company’s activities. Furthermore, it has corporate governance guidelines and procedures set in place which outline the permissible conduct of all directors, officers, and employees (Scotiabank, n. d. ). It is through these governance policies that Scotiabank addresses the needs of its shareholders. The Bank is committed to making profits in order to satisfy its shareholders and ensure continued growth in the financial sector.

As a whole, Scotiabank targets companies and individuals, through retail, wealth management, small businesses and commercial services within Canada and internationally. These target markets are addressed in the three major business lines: Canadian Banking, International Banking and Scotia Capital. Each one of these business lines focuses on different markets, portrayed by the range of products that they have to offer. Canadian Banking deals with more than 7 million customers across Canada, including small, medium, and large businesses. Its network includes 1,016 branches and 2,943 Automated Banking Machines across the country (Scotiabank, n. . ). This line of business is subdivided into Retail and Small Business Banking which focuses on individuals and their everyday banking needs; Wealth Management, including financial advice for larger accounts, and Commercial Banking, that takes care of medium and large businesses. The personal banking division, which this report mainly focuses on, is targeting younger customers more as the Bank could cross sell more products and services to this customer base as well as increase the segment’s product holding within the bank (Dhesi, 2007).

With an aging population, it is important to gain new customers in order to continue in business. International Banking targets those looking for retail services and commercial banking operations abroad. With the goal of being the top Canadian-based financial service company, Scotiabank has spread its influence in over 40 countries through 1,850 branches and 3,300 Automated Banking Machines (Scotiabank, n. d. ). Scotia Capital is the corporate line of business offered by the bank. It focuses on corporate governments and institutional investor clients in Canada and Mexico by offering investment products.

Their services range from providing loans and investment products to financial advice. Organized by industry, there are 27 offices woldwide and more than 300 relationship managers (Scotiabank, n. d. ). This line of business uses NAFTA as a strategic base for its expansion. The actions of the Canadian government significantly impact the way Scotiabank and the entire banking industry conduct their operations. The government acts as a regulator of the banking industry and sets specific standards in order to protect the customers’ interests. The most effective egulation that the government has installed is the issuing of quarterly and annual reports, which all public companies must publicly release. These reports contain important information on how the company conducts its business and whether or not it meets the goals that it sets. These documents make the companies more publicly accountable for their actions. All banking institutions operating in Canada are subject to the requirements outlined in the Bank Act of Canada. The Bank Act was passed in 1871 by the federal government and has been amended numerous times since then.

It outlines how banks are to operate in Canada (Canadian Bankers Association, 2009), and lays out specific requirements that must be met by banking institutions. Under the Bank Act, banks must hold certain capital ratios. It is stated through government legislation that all banks must have a capital ratio of at least 10% (Department of Finance Canada, 2001). For a detailed listing of some of the requirements, please refer to Appendix A. Scotiabank, being a banking institution in Canada, must abide by the Act in all respects. Marketing and Operations Management

Scotiabank offers numerous products and services within its personal banking division which can be categorized into four groups: day-to-day banking, borrowing, insurance, and investing. The day-to-day banking services comprise of transaction accounts, savings accounts, and financial planning services (Scotiabank, n. d. ). These services are used frequently on a day-to-day basis by its customers. The borrowing services, that are provided to customers, include personal loans, mortgages, and lines of credit. They offer competitive interest rates on loans and mortgages in order to attract customers to their services.

Scotiabank also offers insurance and investment services. The insurance services the Bank provides are not unlike those offered by other financial institutions. They offer life insurance, creditor insurance, and travel insurance to their customers. Customers wishing to invest their money have many options with Scotiabank. Not only do they offer investment accounts, they also provide financial planning to their customers so they can invest their money with greater confidence (Scotiabank, n. d. ). Scotiabank ensures the quality of its products and services in many ways.

The first is through comparing their interest rate with competitors in the market. By knowing what their competitors offer, Scotiabank can adjust and configure its services to better suit the consumer and try to attract more customers. The company frequently adjusts its policies to ensure the quality of their services. By following company guidelines, Scotiabank can meet high standards for its services day after day. A final way in which Scotiabank ensures the quality of its services is through the use of Secret Shoppers. This means having people act as if they were the customer and rate their experience.

The reports are then passed on to the appropriate people who then make decisions on how to improve their product standards or how to continue to meet the expectations of the customer. There are many factors that go hand in hand when determining what products and services Scotiabank will provide. Banks must determine how to set prices, and how to promote and place the products and services in the market. The status of the economy is always taken into consideration when deciding what services to offer and what products to provide.

For example, during these uncertain economic times, Scotiabank is offering lower interest and mortgage rates in order to promote consumer spending and to attract consumers. Prices are set with respect to the interest rates offered to banks by the Bank of Canada (BOC). The Bank Rate is the rate at which the BOC lends funds to financial institutions such as Scotiabank (Bank of Canada, 2009). If the Bank of Canada charges Scotiabank a certain bank rate, then Scotiabank must charge a comparable rate on its products and services in order to turn a profit.

Scotiabank also has to consider its competitors when setting the price level for its products. They must be strategic in setting their prices otherwise consumers will take their business and banking needs elsewhere. The products and services described above benefit society in many ways. Scotiabank offers a secure place for customers to store their money. Customers earn interest on their funds which puts more money in their pockets. Instead of keeping their money at hand, customers have the peace of mind that their funds are safe and earning interest at a Scotiabank branch.

Scotiabank’s investment services and advice help customers avoid potential problems and challenges, allowing them to bank with confidence. The more informed a customer is, the more likely they are to avoid potential problems associated with economic downturns. All of these factors preventcustomrs from having to constantly worry about their money. It can be said, then, that Scotiabank positively affects society and will continue to do so in the future. In order to maintain its market share, Scotiabank focuses on continual acquisitions of other banks within Canada and around the globe.

It has recently acquired an undisclosed major share of Five Continents Financial, an institution in the Cayman Islands (Mint Global, 2008). This and other acquisitions increased the Bank’s presence in South America and the Caribbean. For a more detailed listing of recent acquisitions, refer to Appendix B. Technology has played an increasing role in the banking industry over the past years. Banks use technology more frequently and focus on three main areas: increasing security, increasing efficiency and productivity, and facilitating processes for their customers (Bureau of Labour Statistics, 2008).

Scotiabank has recently made significant strides regarding all three areas. It has increased security regarding the protection applied to accounts and in the use of telephone and online banking. Some of the measures taken are enforcing the use of 128-bit encryption browsers and constantly monitoring their accounts in order to spot any kind of abnormal behavior. This helps prevent unauthorized access to the bank systems, which protects the customers and, ultimately, the bank’s reputation. Regarding efficiency, Scotiabank signed a $480 million outsourcing deal with IBM in September 2007.

Under this contract, IBM will manage the information technology operations of the Bank (“Scotiabank seal,” 2007). Most banks, including Scotiabank, are now offeing telephone banking, on-line banking and mobile banking. The convenience that this brings to customers can determine whether a person wants to deal with a certain bank or take their business elsewhere. Technology in this area is essential to providing customers with services other banks do not. Corporate Social Responsibility Social and ethical responsibility has become increasingly important to Scotiabank.

Since 1834, Scotiabank has prided itself in the idea of being ethical and socially responsible. An examination of the following two primary activities that demonstrate these traits will show that Scotiabank is living up to its commitment to corporate social responsibility (CSR) as outlined in their CSR policies. Scoitabank recognizes its responsibility towards the community and shows it by aiding in the development of society. Scotiabank involves its employees in local fundraising activities and volunteer activities for many non-profit organizations (Scotiabank CSR, 2008).

By fundraising and donating their time, Scotiabank and its employees show a commitment to the development of the community. Scotiabank does an excellent job promoting these values as they involve their top management in the process as well. Scotiabank understands the importance of the environment and is trying to move towards sustainable development. The company is trying to reduce its environmental footprint by improving the efficiency in the use of paper products and office equipment (“New Scotiabank Environmental”, 2008). By offering paperless banking, Scotiabank can significantly reduce its impact on the environment.

Considering the significant number of transactions performed each year, paperless banking will significantly reduce the paper consumption. This helps with the conservation of forests, an important natural resource. Also, by purchasing multi-functional office equipment, efficiency will be enhanced and the environmental impact of the factors of production will be much less (“New Scotiabank Environmental”, 2008). Instead of purchasing a printer, a photocopier, scanner, and fax machine, a multi-functional machine could be purchased instead.

The pollution and strain on natural resources from the factors of production of each of the units would be decreased as one would need less material for one machine rather than four (“New Scotiabank Environmental”, 2008). Based on these factors, it can be concluded that Scotiabank is actively promoting environmental sustainability and is on the right path. Recent Issues Scotiabank does not always act responsibly. The Bank has recently been involved in a lawsuit with its employees regarding unpaid wages. Cindy Fulawka, who represents the employees in the lawsuit, filed a 350 million dollar class action lawsuit against the Bank (Bao, 2008).

The lawsuit is on behalf of current and former-non-management, non-unionized employees of Scotiabank working in retail branch offices across Canada. This accusation has stained the company image and has put some discomposure between the Bank and its most imperative stakeholders: the employees. This event could be a determining factor for people seeking work at Scotiabank. Prospective employees may choose to go elsewhere if they believe that Scotiabank does not offer a high-quality work environment. Canadian National Railway (CNR) and CIBC have also faced similar claims as Scotiabank (Bao, 2008).

Over recent years, the “Green” movement has become more popular in the banking industry as businesses begin to change their policies in order to be more environmentally respectful. Scotiabank decided to get on board by offering paperless banking. With new technologies being developed every day, the Bank has seen an increase in efficiency while being more environmentally friendly (Whitnall, 2000). The bank has found that paperless banking has a profit margin of 47 percent while traditional banking has a profit margin of a mere 26 percent (Menon, 1999).

For Scotiabank, this appears to be a win-win situation. Many companies have been hit by the “Green” movement negatively; however, Scotiabank has turned what others view as negative into a positive situation. Companies, like Scotiabank, who demonstrate social and environmental responsibility can improve their competitive advantage and increase their market share in the industry. The banking industry as a whole has been faced with the difficult issue of online banking security. Over recent years, the number of attacks on online backing services has been steadily increasing (Buckstein, 2008).

In order to combat this important issue, banks are investing more and more of their revenues into implementing new security features and procedures. This has a profound impact on the banking industry. According to the Canadian Bankers Association, the six largest banks in Canada, one of which is Scotiabank, spent 4. 4 billion dollars on security infrastructure in 2006. In the decade lasting from 1996 to 2006, these same banks spent a total of 37. 6 billion dollars on the same infrastructure (Buckstein, 2008). This issue brings a great monetary cost to Scotiabank and the other banks who offer online banking and will continue to o so well into the future. In addition, the banking industry has been significantly impacted by the recent economic downturn. American foreign and domestic banks have already been granted a break by the US treasury department with a new $700 billion bailout law. This market intervention was important in preventing an economic depression but that action increased more credit and debt in weakening economy (Newman, 2008). The top five Canadian banks have raked in $18. 9 billion dollars in profits while compared to top banks in the US which have net loss of $37 billion dollars.

Even though the profits are weaker than in previous years, Canadian banks are still posting higher profits than the major banks in the US of which some are currently facing debt or bankruptcy (Norris, 2009). Although the credit crisis has not been much of an issue in Canada, the situation will soon worsen. Although Scotiabank has weathered the storm much better than its competitors, it is still cause for concern. The reduction in profits has caused numerous layoffs increasing unemployment as many branches are unable to sustain the costs of employment with.

At this moment, it is uncertain how Scotiabank will be impacted in the long-run Financials Scotiabank experienced growth in its net income up until its record-high of $3,994 million in the fiscal year ending October 31, 2007, with earnings per share averaging $4. 01. This was an increase of 13% from 2006, another year where the Bank posted a then-record $3,549 million in net income (earnings per share were $3. 55). This growth, however, came to a halt once 2008 loomed in and the global banking scene entered into turmoil.

The Bank of Nova Scotia presented a 24% decrease in its net income from the previous year, totaling $3,033 million as of the fiscal year ending October 31, 2008 (earnings per share were $3. 05) (Scotiabank Annual Report, 2008). The banking industry in Canada, was not completely immune to the turmoil in global banking. The Bank of Nova Scotia took a pre-tax charge of C$890 million in late 2008 on its structured finance and trading businesses, well above analysts’ estimates (Simon, 2008). The Bank’s shares have slid 5% from their record high of C$54. 0 in May 2007. Furthermore, the Bank’s international operations are viewed by some as a detriment as thirty-two percent of the Bank’s net income comes from Latin America, a region where loan losses are expected to rise due to the global crisis (Racanelli, 2009). Please refer to Appendix C for additional financial information. Despite this, Scotiabank has been hit far less so than other banks, particularly less so than those from the U. S. The Bank, regarded as tight-fisted in its practices, is less exposed to assets south of the border, with no U.

S. subprime residential debt. Due to its conservative practices, the Bank has managed to consistently boost its earnings and dividends for more than a decade, in part due to traditional loans. It is expected, then, that the Bank will have no need for government aid to survive, nor is it expected to take significant write-downs, rendering it capable of smoothly handling the current crisis and potentially benefitting the most once the problems subside (Racanelli, 2009). Furthermore, to boost profitability, Scotiabank can cut costs.

They expect to ratchet down the bank’s productivity ratio-costs as a percentage of revenue to 58% from an already stingy 59%. Such a drop would save the bank hundreds of millions of dollars (Racanelli, 2009). Conclusion The Bank of Nova Scotia has shown a progressive drive to continually improve its work environment. The company offers competitive benefits and compensation and provides a healthy atmosphere to work in. By examining the documents in Appendix D, one can conclude Scotiabank ranked above average in terms of its treatment towards employees.

Based on this important factor and other factors presented in this report, it would be appropriate to conclude that the Bank of Nova Scotia would be an excellent employer for recent and future graduates of the Haskayne School of Business. Appendix A: Excerpt from The Bank Act of Canada PART VIII BUSINESS AND POWERS General Business Main business 409. (1) Subject to this Act, a bank shall not engage in or carry on any business other than the business of banking and such business generally as appertains thereto. Idem (2) For greater certainty, the business of banking includes (a) providing any financial service; b) acting as a financial agent; (c) providing investment counseling services and portfolio management services; and (d) issuing payment, credit or charge cards and, in cooperation with others including other financial institutions, operating a payment, credit or charge card plan. Additional activities 410. (1) In addition, a bank may (a) hold, manage and otherwise deal with real property; (b) provide prescribed bank-related data processing services; (c) outside Canada or, with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely, (i) collecting, manipulating and transmitting A) information that is primarily financial or economic in nature, (B) information that relates to the business of a permitted entity, as defined in subsection 464(1), or (C) any other information that the Minister may, by order, specify, (ii) providing advisory or other services in the design, development or implementation of information management systems, (iii) designing, developing or marketing computer software, and (iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services; (c. 1) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used (i) to provide information that is primarily financial or economic in nature, (ii) to provide information that relates to the business of a permitted entity, as defined in subsection 464(1), or (iii) for a prescribed purpose or in prescribed circumstances; (c. ) engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services; (d) promote merchandise and services to the holders of any payment, credit or charge card issued by the bank; (e) engage in the sale of (i) tickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest, (ii) urban transit tickets, and (iii) tickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments; (f) act as a custodian of property; and (g) act as receiver, liquidator or sequestrator. Restriction 2) Except as authorized by or under this Act, a bank shall not deal in goods, wares or merchandise or engage in any trade or other business. Regulations (3) The Governor in Council may make regulations (a) respecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c) to (c. 2); (b) imposing terms and conditions in respect of (i) the provision of financial services referred to in paragraph 409(2)(a) that are financial planning services, (ii) the provision of services referred to in paragraph 409(2)(c), and (iii) the carrying on of the activities referred to in any of paragraphs (1)(c) to (c. ); and (c) respecting the circumstances in which banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c. 1). 1991, c. 46, s. 410; 1993, c. 34, s. 8(F); 1997, c. 15, s. 42; 2001, c. 9, s. 100. PART XIII REGULATION OF BANKS — SUPERINTENDENT Supervision Returns Required information 628. (1) A bank shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require. (2) [Repealed, 1997, c. 15, s. 86] 1999, c. 28, s. 36. 629. [Repealed, 2007, c. 6, s. 102] 630. [Repealed, 2007, c. 6, s. 102] 631. [Repealed, 2007, c. 6, s. 102] Names of directors and auditors 632. 1) A bank shall, within thirty days after each annual meeting of the bank, provide the Superintendent with a return showing (a) the name, residence and citizenship of each director holding office immediately following the meeting; (b) the mailing address of each director holding office immediately following the meeting; (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member; (d) the affiliation, within the meaning of section 162, with the bank of each director referred to in paragraph (a); (e) the names of the directors referred to in paragraph (a) who are officers or employees of the bank or any affiliate of the bank, and the positions they occupy; (f) the name of each committee of the bank on which each director referred to in paragraph (a) serves; (g) the date of expiration of the term of each director referred to in paragraph (a); and (h) the name, address and date of appointment of the auditor or auditors of the bank. Changes (2) Where (a) any information relating to a director or an auditor of a bank shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c) or (d), becomes inaccurate or incomplete, (b) a vacancy in the office of auditor of the bank occurs or is filled by another person, or (c) a vacancy on the board of directors of the bank occurs or is filled, the bank shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form. 1999, c. 28, s. 38. Copy of by-laws 633.

A bank shall send to the Superintendent, within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment. 1999, c. 28, s. 38; 2001, c. 9, s. 173. Register of banks 634. (1) The Superintendent shall, in respect of each bank for which an order approving the commencement and carrying on of business has been made, cause a register to be maintained containing a copy of (a) the incorporating instrument of the bank; and (b) the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 632. Form (2) The register may be maintained in a) a bound or loose-leaf form or in a photographic film form; or (b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time. Access (3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it. Evidence (4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent. 1999, c. 28, s. 39; 2001, c. 9, s. 173. Production of information and documents 635. 1) The Superintendent may, by order, direct a person who controls a bank or any entity that is affiliated with a bank to provide the Superintendent with such information or documents as may be specified in the order where the Superintendent believes that the production of the information or documents is necessary in order to be satisfied that the provisions of this Act are being duly observed and that the bank is in a sound financial condition. Time (2) Any person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time. Exemption 3) Subsection (1) does not apply in respect of an entity that controls a bank or is affiliated with a bank where that entity is a financial institution regulated (a) by or under an Act of Parliament; or (b) by or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions. 1999, c. 28, s. 40. Note: This is not the Bank Act as a whole, only a small selection to show government involvement in bank regulation. Source: Department of Justice Canada. (2009, March 30). Bank Act (1991, c. 46). Retrieved April 1, 2009, from http://laws. justice. gc. ca/en/showdoc/cs/B-1. 1/bo-ga:l_XIII//en#anchorbo- ga:l_XIII Appendix B: Recent Mergers and Acquisitions 03/06/2009 Bank of Nova Scotia acquired a stake in Five Continents Financial . 03/04/2009 ScotiaBank acquires UBS Energy assets 02/24/2009 Continental Exchange Systems acquires Bancomerico 12/12/2008 Scotiabank acquires CI stake from Sun Life 10/06/2008 Scotiabank to complete transaction with Sun Life next week and amends terms of purchase price 09/29/2008 Scotiabank acquires E*TRADE Canada 08/25/2008 Bank of Beijing teams up with Bank of Nova Scotia in fund management JV 08/22/2008 Scotiabank may sell mutual funds division 08/05/2008 Bank of Nova Scotia seeks more acquisitions 7/14/2008 Scotiabank to acquire E*TRADE Canada 06/18/2008 Bank of Nova Scotia could be interested in acquiring a stake in AFP Profuturo 03/26/2008 Bank of Nova Scotia plans wealth management acquisitions 03/26/2008 Scotiabank completes public offering 02/20/2008 Scotiabank acquires minority stake in Cidel 02/04/2008 Scotiabank’s acquisition of Grupo Altas Cumbres’s banks fails 12/13/2007 Bank of Nova Scotia acquires stake in BBVA Crecer AFP and BBVA Seguros 10/01/2007 Scotiabank acquires TradeFreedom Securities Inc 09/28/2007 DundeeWealth Inc. completes private placement with Scotiabank 09/28/2007 Scotiabank has acquired Dundee Bank of Canada from DundeeWealth Inc 8/31/2007 Scotiabank to acquire stake in Banco del Desarrollo 08/31/2007 Intesa to sell its stake in Banco del Desarrollo 08/31/2007 Scotiabank to acquire stake in Banco del Desarrollo 08/27/2007 Bank of Nova Scotia acquires stake in FirstBank Puerto Rico 08/03/2007 Bank of Nova Scotia hot for Chilean bank 08/01/2007 Scotiabank may acquire Banco del Desarrollo 04/03/2007 Alcatel-Lucent to acquire Tropic Networks Inc. 03/20/2007 Scotiabank announces underwriters exercised overallotment option 02/15/2007 Scotiabank has acquired Travelers Leasing Corporation 02/05/2007 Scotia Group Jamaica Ltd will become the new holding company for Dehring Bunting & Golding 1/17/2007 Dalian City Commercial Bank confirms stake sale to Scotiabank and International Finance Bank 01/15/2007 The Bank of Nova Scotia may take minority stake in Dalian City Commercial Bank 01/03/2007 Scotiabank buys back shares 12/14/2006 Bank of Nova Scotia Jamaica Ltd and Bank of Nova Scotia have acquired a stake in Dehring Bunting & Golding Ltd. 11/14/2006 Scotiabank acquires Travelers Leasing Corporation 09/01/2006 Bank of Nova Scotia to acquire Corporacion Interfin 06/14/2006 The Bank of Nova Scotia has been looking for acquisition in Malaysia 06/14/2006 The Bank of Nova Scotia planning to make further Central American acquisitions 06/13/2006 Bank of Nova Scotia to acquire Corporacion Interfin 5/05/2006 NexGen Financial receives investment. 04/18/2006 The Bank of Nova Scotia to acquire Dominican Republic-based retail banking division of Citigroup 04/03/2006 Bank of Nova Scotia completes acquisition of mortgage business of Maple Leaf Financial Source: Mint Global. (2008). Company Report for The Bank of Nova Scotia. Retrieved April 1, 2009, from Mint Global database. Appendix C: Financials and Ratios Three Year Stock Graph for “BNS” Appendix C Continued: Financials & Ratios Annual Balance Sheet for The Bank of Nova Scotia All amounts in millions except per share amounts. 10/2008 (TTM)10/2007 (TTM)10/2006 (TTM)10/2005 (TTM) Assets Cash and Due from Banks2,141. 002,260. 002,032. 02,118. 00 Restricted Cash0. 000. 000. 000. 00 Fed. Funds Sold/Securities Purchased16,175. 0023,829. 000. 000. 00 Interest-Bearing Dep at Other Banks26,876. 0024,325. 0015,806. 0012,858. 00 Investment Securities, Net33,050. 0030,814. 0029,424. 0019,861. 00 Loans242,250. 00242,486. 00205,967. 00163,853. 00 Unearned Premiums0. 000. 000. 000. 00 Allowance for Loans and Lease Losses2,184. 002,369. 002,324. 002,091. 00 Net Loans240,066. 00240,117. 00203,643. 00161,762. 00 Premises and Equipment2,235. 002,401. 002,011. 001,638. 00 Due from Customers Acceptance9,953. 0012,197. 008,516. 006,416. 00 Trading Account Securities40,160. 0063,093. 0055,697. 042,351. 00 Other Receivables0. 00907. 000. 000. 00 Accrued Interest0. 001,903. 000. 000. 00 Deferred Acquisition Cost0. 000. 000. 000. 00 Accrued Investment Income0. 000. 000. 000. 00 Separate Account Business0. 000. 000. 000. 00 Time Deposits Placed0. 000. 000. 000. 00 Intangible Assets2,125. 001,487. 001,040. 00621. 00 Other Assets49,360. 0031,674. 0019,638. 0018,323. 00 Total Assets 422,141. 00 435,007. 00 337,808. 00 265,948. 00 Liabilities Non-Interest Bearing Deposits0. 000. 000. 000. 00 Interest Bearing Deposits288,216. 00304,929. 00235,227. 00184,154. 00 Short Term Debt0. 000. 000. 000. 00 Other Liabilities55,650. 0041,922. 0028,203. 027,349. 00 Bankers Acceptance Outstanding9,953. 0012,197. 008,516. 006,416. 00 Fed. Funds Purchased/Securities Sold40,088. 0046,698. 0041,772. 0031,315. 00 Accrued Taxes0. 000. 000. 000. 00 Accrued Interest Payables2,279. 002,522. 002,377. 000. 00 Other Payables3,920. 004,528. 003,661. 000. 00 Capital Lease Obligations0. 000. 000. 000. 00 Claims and Claim Expense0. 000. 000. 000. 00 Future Policy Benefits0. 000. 000. 000. 00 Unearned Premiums0. 000. 000. 000. 00 Policy Holder Funds0. 000. 000. 000. 00 Participating Policyholder Equity0. 000. 000. 000. 00 Separate Accounts Business0. 000. 000. 000. 00 Minority Interest417. 00525. 00388. 00259. 00

Long Term Debt3,619. 001,808. 002,024. 002,835. 00 Total Liabilities 404,142. 00 415,129. 00 322,168. 00 252,328. 00 Stockholder’s Equity Preferred Stock Equity2,378. 001,728. 00535. 00508. 00 Common Stock Equity15,619. 0018,149. 0015,105. 0013,112. 00 Common Par0. 000. 000. 000. 00 Additional Paid In Capital3,184. 003,770. 003,053. 002,809. 00 Cumulative Translation Adjustment-2,990. 00-4,809. 00-2,069. 00-1,661. 00 Retained Earnings15,425. 0018,457. 0014,121. 0011,963. 00 Treasury Stock0. 000. 000. 000. 00 Other Equity Adjustments0. 0056. 000. 000. 00 Foreign Currency Adjustments0. 000. 000. 000. 00 Net Unrealized Loss/Gain on Investments0. 00675. 000. 00. 00 Net Unrealized Loss/Gain on Foreign Cur0. 000. 000. 000. 00 Net Other Unearned Losses/Gains0. 000. 000. 000. 00 Total Equity 17,997. 00 19,877. 00 15,640. 00 13,620. 00 Share Data Shares Outstanding Common Class Only991. 92983. 77989. 51990. 18 Preferred Shares114. 4065. 4024. 0024. 00 Total Ordinary Shares0. 000. 000. 000. 00 Total Common Shares Outstanding991. 92983. 77989. 51990. 18 Treasury Shares0. 000. 000. 000. 00 TTM = Trailing Twelve Months Appendix C Continued: Financials & Ratios Key Figures Fiscal Years Ended 200820072006 Net Earnings2611. 004276. 002718. 00 Earnings per share2. 554. 273. 20 Diluted earnings per share2. 544. 43. 16 Total assets422,121. 00435,007. 00337,008. 00 Long-term debt3,619. 001,808. 002,024. 00 Number of shares outstanding at year-end991. 92983. 77989. 51 Note: Scotiabank key figures for 2008, 2007, and 2006 (in millions of dollars, except for number of shares and earnings per shares) Appendix C Continued: Financials Ratios Current Ratio: 1. 04 Net Working Capital: $17,999,000,000 Net Profit Margin: 27. 44% Operating Margin: 31. 63% Return on Equity: 17. 05% Earnings per Share: $2. 55 Sources: MarketWatch Inc. (2009). Bank of Nova Scotia (The). Retrieved April 1, 2009, from http://www. marketwatch. com/tools/quotes/printable. asp? ymb=BNS=advanced=true=10=1=Enter%20Symbol(s):=aaaaa~0=2048=0=50=1=0=0=2=aaaaa~0=2=1013=true=0=0=Interactive%20Charting=/tools/quotes/intchart. asp=770789742 MarketWatch Inc. (2009). The Bank of Nova Scotia Retrieved April 1, 2009, from http://www. marketwatch. com/tools/quotes/financials. asp? symb=BNS=46168=2=1 Google Inc. (2009). The Bank of Nova Scotia. Retrieved April 1, 2009, from http://www. google. ca/finance? q=TSE:BN References Bank of Canada. (2009). Monetary Policy. Retrieved March 10, 2009, from http://www. ankofcanada. ca/en/faq/faq_bank_monetary. html#6 Bao, J. (2008, August). Time is money. Canadian Business, 81(12/13), 14. Retrieved March 16, 2009, from ABI/INFORM Global database. Buckstein, J. (2008, September 11). Online banking faces new threats. Calgary Herald,A. 16. Retrieved April 2, 2009, from Canadian Newsstand Core database. Bureau of Labour Statistics. (2007, December 17). Career Guide to Industries. Retrieved March 17, 2009, from http://www. bls. gov/oco/cg/cgs027. htm Canada Newswire. (2008) New Scotiabank Environmental Paper Policy Helps Promote Sustainable Forestry and Reduced Paper Consumption. (21 July, 2008). Canada NewsWire.

Retrieved March 20, 2009, from CBCA Complete database. Canadian Bankers Association. (2009, March 2). Federal Jurisdication. Retrieved March 5, 2009, from http://www. cba. ca/index. php? option=com_content=article=77%3Afederal- jurisdiction=47%3Aregulatory-enviornment=en=57 Department of Finance Canada. (2001). Canada’s Banks. Retrieved February 24, 2009 from http://www. fin. gc. ca/toc/2001/bank_-eng. asp Department of Justice Canada. (2009, March 30). Bank Act (1991, c. 46). Retrieved April 1, 2009, from http://laws. justice. gc. ca/en/showdoc/cs/B-1. 01/bo-ga:l_XIII//en#anchorbo-ga:l_XIII Dhesi, Daljit. (2007, April 13). Banks Target Young.

Retrieved April 5, 2009 from http://biz. thestar. com. my/news/story. asp? file=/2007/4/13/business/17227349=business Google Inc. (2009). The Bank of Nova Scotia. Retrieved April 1, 2009, from http://www. google. ca/finance? q=TSE:BNS Himmelsboch, Vawn. (2006, March 17). Scotiabank writes a new chapter in data capture. Retrieved March 20, 2009 from ABI/Inform database. Jantzi Research Inc. (2008, August). Bank of Nova Scotia (The)(BNS). Retrieved April 5, 2009, from Canadian Social Investment database. MarketWatch Inc. (2009). Bank of Nova Scotia (The). Retrieved April 1, 2009, from http://www. marketwatch. com/tools/quotes/printable. asp? ymb=BNS=advanced=true=10=1=Enter%20Symbol(s):=aaaaa~0=2048=0=50=1=0=0=2=aaaaa~0=2=1013=true=0=0=Interactive%20Charting=/tools/quotes/intchart. asp=770789742 MarketWatch Inc. (2009). The Bank of Nova Scotia Retrieved April 1, 2009, from http://www. marketwatch. com/tools/quotes/financials. asp? symb=BNS=46168=2=1 Menon, V. (1999, March 20). No slips at paperless bank branch: [Final Edition]. Niagara Falls Review,p. A8. Retrieved March 10, 2009, from Canadian Newsstand Core database. Mergent Inc. (2008). Bank of Nova Scotia Data Report. Retrieved March 20, 2009 from Mergent Online database. Mint Global. (2008). Company Report for The Bank of Nova Scotia. Retrieved April 1, 2009, from Mint Global database. Newman, K. 2008, October 9). Confidence Crisis. Global News Transcripts, p. 2. Retrieved March 8, 2009, from CBCA Complete database. Norris, G. (2009, February 27). Canadian banks still cashing in big profits; Finance But bankers also acknowledge 2009 will be tough, and even maintaining flat earnings for the year will be hard. Telegraph-Journal,B. 1. Retrieved March 8, 2009, from Canadian Newsstand Core database. Racanelli,V. J. (2009, February). A Canadian Bank Plays It Safe… and Smart. Barron’s, 89(6), 25-26. Retrieved February 23, 2009, from ABI/INFORM Global database. Scotiabank. (2008). Annual Report. Retrieved March 15, 2009, from Sedar Database.

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