Scotiabank President and CEO Rick Waugh addresses Economic Club of Canada
TORONTO, Sept. 18, 2012 /CNW/ - Consumers and banks share the same goals: a safe and well-functioning financial system that supports a strong economy said Rick Waugh, Scotiabank President and CEO while addressing the Economic Club of Canada today. "In order for banks to help economies grow, a certain level of risk must be taken. It's how those risks are managed and how we find that balance that makes all the difference and determines our success or failure."
Mr. Waugh said that the world's economy continues to struggle and the financial sector as a whole has shouldered much of the blame for the events of the past several years. He said, "quite frankly, it's frustrating, because these very recent public errors by a few banks give consumers the impression that all banks haven't learned anything from the financial crisis - when in fact, that's not the case at all."
Mr. Waugh went on to say that over and above what's been asked by regulators, the global banking industry on its own accord has made major progress on restoring capital and improving risk management since the crisis. "It's more important than ever that banks re-build and maintain the trust of customers, and work with them to grow and become financially better off. The reason banks exist in the first place is to help customers transact their financial needs in safety and confidence - and we must never lose sight of that."
Mr. Waugh said risk management is not just about models and rules. He said "that's because the human element - the culture of the organization - our values and understanding our customers - play an essential role. One of the key elements of risk management is establishing a strong risk culture where the tone is set at the top and then embedding that culture throughout the organization." He went on to say "that's where values come in, because decisions are rarely black and white - and we rely on our training, our values and our culture to guide us to the right decisions."
The financial industry has long been proactive about improving risk management and Canadian policy makers and supervisors have played a significant role. Mr. Waugh named a number of new steps in risk management that have begun to make a real difference including boards of directors being more involved in nearly all aspects of risk and the expanding role of Chief Risk Officers and the growing scope of their responsibility.
When discussing risk management practices, Mr. Waugh said "Our approach to risk management is rooted in the strengths of the Canadian system - the soundest in the world - based on principles rather than rules, with sound supervision and government policies, good business judgment and quality risk management. The result is strong and stable banks with sustained profitability - the best defense against further crises - and, most importantly, the best able to support customers in a sustained slow economy."
Mr. Waugh said at Scotiabank "prudent risk management and appetite is part of our five-point strategy which we've managed under for several years. It's been a traditional strength of our Bank, something we've been focused on since the beginning - and it remains a very important part of our brand, particularly in international markets. Our entire organization is geared to manage risk well from our structure to our values."
"For Scotiabank it starts with our highly diversified and carefully balanced business model. We are roughly split 50/50 between Canadian and international, and our four business lines are more evenly divided than any of our peers. Diversification means stability." In addition, Mr. Waugh said Scotiabank maintains strong capital levels well above regulatory minimums, has long term relationships with customers, and its core values - respect, integrity, commitment, insight and spirit - underpin everything.
"In order to tackle the big challenges ahead of us - to restore stability, job creation and strong growth to the global economy it's going to take the continued effort, dialogue and cooperation of all parties."
Mr. Waugh concluded by saying "Huge progress has been made by financial institutions to correct the mistakes of the past and build a stronger, safer and more resilient global financial system that supports and drives economic growth." He continued by saying "It's up to us, the leaders of our organizations to set the tone. Leadership is more than making the big decisions; it's modeling every day the behaviour you want to see in your organization - leading by example - and, holding others accountable for doing the same."
Scotiabank is one of North America's premier financial institutions and Canada's most international bank. With more than 81,000 employees, Scotiabank and its affiliates serve some 19 million customers in more than 55 countries around the world. Scotiabank offers a broad range of products and services including personal, commercial, corporate and investment banking. With assets of $670 billion (as at July 31, 2012), Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS). For more information please visit www.scotiabank.com.
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