Bank of Nova Scotia CEO Brian Porter to retire in January

Scott Thomson comes from outside Scotia’s executive team, a rare transition in Canada’s tight-knit banking world

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Brian Porter, who navigated the Bank of Nova Scotia through the financial crisis as chief risk officer and then overhauled the bank’s operations in Latin America and embarked on digital innovation as CEO, is stepping down at the end of January after nine years at the helm.

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His successor, Scott Thomson, comes from outside Scotia’s executive team, a rare transition in Canada’s tight-knit banking world.

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Thomson, managing director of equipment distributor Finning International Inc., has served on Scotia’s board of directors since 2016. He will initially transition to the executive board of Canada’s third-largest bank, becoming President effective December 1, with responsibility for the bank’s businesses: Canadian Banking, Global Banking and Markets, Global Wealth Management and International Banking.

John Aiken, banking analyst at Barclays, said the non-traditional appointment is unlikely to signal a sharp change in strategy as Thomson helped pave the way as a member of the board.

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“The appointment of a Canadian bank CEO from outside the organization/industry is surprising,” he told clients in a note Monday morning. “Nonetheless, given Mr. Thomson’s involvement on the board (and on several committees), we do not expect the transition to be jarring.”

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The analyst added that Thomson’s experience in Latin America, where Scotia has significant operations, “is positive and was likely a component that attracted the selection committee.”

Scott Thomson, left, and Brian J. Porter, right.
Scott Thomson, left, and Brian J. Porter, right. Photo by CNW GROUP/Scotiabank

After Thomson takes over as CEO, Porter will become a strategic advisor and will remain in that role from February 1, 2023 to April 30, 2023 “to support the transition,” the bank said.

Prior to Finning, Thomson was Chief Financial Officer of Talisman Energy Inc. Earlier in his career he worked at Bell Canada Enterprises and Goldman Sachs Group Inc.

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In a statement, Porter said he had always viewed banking as a calling and that working in Scotia, 190, was “the honor of my life”. He said he is confident that Thomson will lead the bank through the next phase of its growth and development as he is “a results-oriented and proven leader” whose values ​​align with those of the bank.

“I have every confidence that he will lead the bank extremely well,” Porter said.

Aaron Regent, Scotia’s chief executive, hailed Porter as a forward-thinking leader who has made “bold, strategic decisions that have repositioned the bank” while commanding wealth that has grown from $744 billion to $1.3 trillion US dollar has grown.

“He has realigned the bank’s geographic and business priorities, reallocating capital to companies with greater growth opportunities while withdrawing from non-core markets,” Regent said, noting that the global wealth management business has more than doubled in size and is now by assets is the number two in Canada’s mutual fund industry.

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International banking is now focused on fewer, larger markets that offer greater growth potential.

Thomson, who will retire on November 15 from Finning, the largest dealer of Caterpillar equipment and engines in America and Europe, is an “experienced CEO” whose skills include familiarity with the international market, talent development and digital transformation, Regent said, adding that he has a proven track record of effective capital allocation and strategic investments.

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“He has successfully led large organizations in challenging and complex macroeconomic environments, including providing outstanding leadership on finning during the COVID-19 pandemic,” said Regent.

“As a director of Scotiabank since 2016, Scott brings a thorough understanding of the bank’s strategy, operations, management team, risk appetite, culture and growth drivers.”

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Richard Leblanc, a professor of governance, law and ethics at York University, said it was unusual to combine director and CEO succession.

“From a governance perspective, these are separate routes,” he said. “I’ve only seen that a few times.”

This is particularly rare in the Canadian banking world, where CEOs are typically chosen from among senior management in a preparatory phase that can take years.

Leblanc said Scotia could signal it wants to shake things up, or there may not have been an obvious choice from within.

“Usually a board goes outside when they want a major change… A board can also go outside when the internal bank is weak,” he said.

One benefit of crossover from the boardroom, Leblanc said, is that you get an “insider-outsider” perspective.

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“The Director-CEO is an insider because he’s known the business of the bank for six years… (and) an outsider because his role was to oversee management, so he has that independence and lack of loyalty or clinging at the status quo.” he said.

There could be challenges, however, as the CEO reports to the board, while Thomson, as a fellow board member, would be on an equal footing with the other board members.

“The transition may not be easy,” Leblanc said.

“I don’t see a trend because normally the paths (between) the board and management are very clear.”

Beverly Behan, founder of New York-based Board Advisor LLC, which has consulted with boards in the United States and Canada, including the Bank of Montreal, said it is not customary for a board member to be “appropriately” referred to as CEO steps in. Circumstances.

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She said a well-known example was when Meg Whitman, director of The Hewlett-Packard Co., former CEO of eBay Inc., was installed as HP’s CEO. During her tenure from 2011 to 2015, she oversaw the split of the company into two separate entities: Hewlett Packard Enterprise and HP Inc., focused on personal computers and printers. She stayed on as CEO of the former for a further two years.

In another example, David J. Lesar, a former CEO of Halliburton Co. and a director of large Chicago-based insurance company Health Care Service Corp. (HCSC), as CEO of HCSC in 2019 and stayed for almost a year while the company searched for a permanent successor for the outgoing CEO.

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As CEO, Thomson is committed to accelerating the bank’s customer focus, digital capabilities and ESG priorities, Regent said.

Thomson commended Porter for his “long-term vision and strategic investments in people, processes, technology and products” that will benefit the bank for many years to come.

“I am incredibly honored and energized to join and lead the bank’s world-class leadership team,” Thomson said in the statement.

“During my six years on the board of Scotiabank, I have had the opportunity to see firsthand the incredible potential of this organization and the dedication and skills of its people.”

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