May 2007 Financial News

Scotia Investments, DB&G to merge

May 09, 2007

Scotiabank's wealth creation arm, Scotia Jamaica Investment Management (SJIM), is being be acquired by Dehring, Bunting and Golding (DB&G) as precursor to a merger of the sister operations.

Both Scotiabank and DB&G are subsidiaries of the newly created Scotia Group Limited.

BNS executives said the move would allow DB&G to compete more aggressively for a bigger share of the lucrative wealth management business, already dominated by competitor NCB Capital Markets.

"The combined businesses will result in DB&G becoming a significantly larger entity with the ability to leverage greater economies of scale," said president and CEO of Scotiabank, William Clarke.

The transaction is subject to approval from shareholders at an extraordinary general meeting to be convened for the purpose. Scotia Investments - whose core business comprises pension-funds management, sale of mutual funds, as well as repurchase (repo) agreements - has a capitalisation of about $1.6 billion and funds under management, of some $20 billion.

Subsumed by larger entity

For its financial year to October 31, 2006, SJIM posted net profit of about $220 million. DB&G's capital base and profits are more than triple that of Scotia Investments.

"The intention is to merge Scotia Investments into DB&G. SJIM will move uptown but it will still have a presence [downtown] for those clients that use the Scotiacentre," general manager of Scotia Investments, Anya Schnoor, told Wednesday Business yesterday. "Certainly, I will be working very closely with DB&G because it will be an important part of the overall wealth-management unit."

While stressing that SJIM would not disappear, Schnoor said that both DB&G and Scotia Investments will eventually be subsumed by a larger entity, with a different name.

"It's going to be a process," she said, "but the intention is that there will be this new entity that will be a combination of SJIM and DB&G so I wouldn't say that SJIM will be no more. What is going to come out of this is a new company."

Schnoor gave the assurance that Dehring, Bunting and Golding will continue as a listed company.

"Because DB&G is a listed company, we want to continue to upstream profits to our shareholders in the Scotia Group, so we want to continue to ensure that it remains listed."

Independent assessment

In a move to deflect the type of criticism that the recent scheme of reconstruction to establish the Scotia Group had got from some analysts, the bank said that it had hired independent assessors to review the transaction prior to selling it to shareholders.

Deloitte Touche Tohmatsu has completed the valuation of Scotia Investments, while Sierra Associates Limited, a firm of chartered business valuators, has reviewed the proposed transaction, "and provided their opinion that the transaction is fair to the shareholders of DB&G," the bank said.


Source:
Ashford W Meikle, Business Reporter
The Jamaica Gleaner
Wednesday 9th May, 2007

http://www.jamaica-gleaner.com/gleaner/20070509/business/business1.html