Latin America's best bank transformation 2020: Scotiabank Chile

Awards for Excellence 2020

Scotiabank Chile wins the award for the region’s best bank transformation.

Ignacio Deschamps, group head of international banking and digital transformation at Scotiabank, describes the opportunity to buy BBVA’s operations in the country as a “once-in-a-lifetime opportunity”.

It is easy to understand why.

Both legacy Scotiabank and BBVA had a 7% market share in loans. Simple arithmetic would place a combined entity in joint third place in the banking system, equal to the 14% each market shares of Banco Estado and Banco Credito.

That places the bank not too far behind leaders Santander, with 19%, and Banco do Chile (17%). Even so, the bank was wary of the execution risk of the merger.

Francisco Sardón de Taboada, country head of Chile for Scotiabank, says the bank conducted a study of previous Chilean banking mergers and its findings were worrying.

“On average, these took four years and the combined entity lost 200 basis points in market share,” he says.


Francisco Sardón de Taboada

To maximize the success of BBVA’s integration, Scotiabank started by appointing a leadership team.

“These same leaders were in charge of running the [day-to-day operations of the] bank and integrating the two entities,” says Sardón. “This provided clear accountability and helped success by reducing any tensions.”

The bank broke the integration into five distinct stages, with the last being the integration of the core systems. That was completed in November last year, just 16 months after the merger began – swift by anyone’s standards.

“We began with a target of zero attrition, which caused certain nervousness in head office, but we couldn’t afford to lose any clients or market share,” Sardón says.

In fact, the bank managed to increase market share during the integration process by 36 basis points and has already generated 80% of the C$150 million ($113 million) of targeted synergies (with 42 branches closed by the end of 2018).

Scotiabank expects that the remaining 20% will be captured by the end of 2020.

Scotiabank Chile is already a distinctly different proposition to the pre-BBVA bank. Just five years ago, it was ranked seventh largest and generated a 7% return on equity. It now has a ROE just shy of 14% as calculated under Chilean accounting principles and the bank now generates 6% of Scotiabank’s global banking revenues – level with its Peruvian business and just one percentage point below its most established regional bank in Mexico.

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