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Scotia to pilot premium banking unit, centralise group functions

Published:Friday | January 4, 2013 | 12:00 AM
Bruce Bowen, president and CEO of Scotia Group Jamaica Limited. - FILE

Sabrina Gordon, Business Reporter

Starting now, Scotia Group Jamaica has a three-year plan to consolidate several support services and to deliver targeted services to a segmented customer base under a realignment of its retail distribution network.

The project aims to minimise duplicated services across the group, according to SGJ president and CEO Bruce Bowen, who says the bank is trying to drive up the quality of its services while driving down the costs.

Each of Scotia Group's subsidiaries has its own head office structure, but some services, such as human resources and information technology are centralised for all subsidiaries, said Bowen.

"Now we are reviewing the remaining support areas to identify those that can be similarly centralised across the group," Bruce Bowen, president and chief executive officer of Scotiabank told the Financial Gleaner via email.

"By consolidating such services into a single group department there are economies of scale which result in reduced costs while at the same time improving the quality of support to each subsidiary."

Scotia Group closed its 2012 financial year with the highest nominal profit of any publicly traded Jamaican company, at J$10.57 billion. The results, however, were marginally diminished or close to flat year-on-year and came on the back of growth-challenged interest income.

A week after the results were published, Bowen told an investor's briefing that the realignment of the bank's retail network would be a priority project to be executed up to year 2015.

"In retail distribution realignment we are segmenting our customer base in terms of service and product requirements and ensuring that we are delivering our service in a manner that is aligned with each segment's requirements," Bowen told the Financial Gleaner this week.

In October 2009, the bank launched Scotia Private Client Group, which focuses on high net worth customers - millionaires - who require more sophisticated investment advisory, investment lending and private banking services. These high-stakes clients are served by a special team trained to respond to their individual needs.

Bowen now says the bank is similarly experimenting with a premium banking unit.

"We will be piloting a premium banking unit which will focus on those customers that have similarly sophisticated needs but do not require offshore investments and private banking services," he said.

"Based upon information learned from the pilot we will most likely establish more premium banking units based upon the number of customers needing this service in each market area, but will likely not be in every branch. Similarly, distinct product offerings and service teams will be developed for different market segments," Bowen said.

The cost of the three-year programme was not disclosed.

The bank's capital expenditure was ramped up significantly to J$1.44 billion in 2012 - J$901 million of which was spent on the retail banking segment - which was double the capex of J$764 million in 2011.

Last year was also the highest capex since the 2008 recession. The spend would have included the US$3 million (approx J$270m) project executed in June to replace older automated banking machines with more sophisticated equipment that can facilitate more transactions.

It also restructured some of its banking plans and savings accounts to create a new suite of 12 products, tailored to different types of customers to give greater flexibility and allow for better management of banking fees.

Scotia Group is also targeting more sustainable revenue growth through new markets and pushing non-branch sales.