THE AMERICAS IN A CHANGING GLOBAL ECONOMIC PICTURE: THE VALUE OF PUBLIC-PRIVATE PARTNERSHIPSNovember 20, 2013

Ross Anderson, Vice PresidentGovernment Communications, Policy & Researchross.anderson@scotiabank.com

• Scotiabank in the Americas

• Three forms of partnership1. Investment2. Corporate Social Responsibility3. Economic development

• Focus on consumer & micro finance

• Thoughts on partnerships

Outline

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Scotiabank’s footprint83,000 employees21 million customers 55 countries

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Expansion through the crisis

Scotiabank in the Americas

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Operations

• Largest footprint of any Canadian bank in the Americas

• Active in Caribbean for 125 years and in Latin America for more than 40 years

• More than 61,000 employees in 35 countries

• Network of 2,153 branches

• More than 7.3 MM customers

• Leading financial institution in the Americas providing clients with commercial, corporate, trade finance, correspondent banking and investment services

• Established capital market operations and lending relationships in Brazil, Chile, Costa Rica, Colombia, Dominican Republic, Jamaica, Mexico, Panama, Peru, Puerto Rico, Trinidad and Uruguay

• Dedicated emerging markets group, with seasoned market professionals, providing services related to emerging market cash bonds, foreign exchange, interest rate derivatives, credit derivatives, equities and commodities

• Established global infrastructure platform, with a strong reputation in the Americas

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Young demographic entering the workforce

Growing middle class Increased savings and

investment

Demographics

Macroeconomic fundamentals and strong growth rates

New and expanding client base

Following our customers

Growth

• Good governance and political stability

• Historical, cultural ties, trade agreements

• Good political relationships and investment framework

• Effective supervision and prudential regulation

Stability

Our focus on the Americas

Public-private partnerships…

…for economic and social development: tackling poverty, increasing prosperity and stability

A broader discussion than P3s and long-term project financing, although this is an important area to develop

Focus today on three forms of partnership that we maintain with the governments and communities where we operate:

1. Investment

2. Corporate Social Responsibility

3. Economic development

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Partnerships: Investment

Scotiabank’s investments throughout the region are a partnership with governments, where we bring:

Strong, deeply rooted risk culture and high standards for corporate governance

Prudent, competitive pressure and best practices to credit markets, capital markets, savings, insurance and retirement

A focus on making our bank local, whichever market we are in

Partnerships with local institutions to build incrementally with a long-term outlook

An international perspective, to share expertise, develop leaders

Strong relationships with communities, regulators and governments where we operate

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Partnerships: Scotiabank CSR

Regional HIV-AIDS Testing Day (ongoing)Caribbean Broadcast Media Partnership on HIV-AIDS and regional ministries of health to conduct counselling and confidential testing in select Scotiabank branches In 2013, more than 11,808 people were tested in the Caribbean, at 183 sites in 21 countries

Scotiabank El Salvador (2012)Brock University, the University Pedagogica of El Salvador and El Salvador’s Ministry of Education on a physical education program for children and youthIncluded themes of conflict resolution, team work, personal responsibility in the national curriculum

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Scotiabank’s global philanthropic plan Relevant and responsive at grassroots level Focus on education, healthcare, social

services, arts and culture, sports and environment

In 2012, more than CAD$53 million Scotiabank employees also contributed

more than 500,000 hours of volunteering to local causes

In the Caribbean and Latin America, the program focuses primarily on children and

children's causes.

Partnerships: Scotiabank & economic development

“Security is one of our priorities, but the others are creating formal jobs and reducing poverty. They are all connected.

- Juan Manuel Santos, President of ColombiaFall 2011

Those connections provide common cause for the public and private sectors

Business has a comparative advantage in creating and expanding economic opportunity

Recognize there is a double bottom line of positive financial returns and economic/social benefits

The poor require a range of financial services: safe, accessible savings; microcredit; payment services; insurance

Accessing those services provides huge benefits in terms of security, stability and leverage for disadvantaged populations

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Financial inclusion and financial services

In most developing countries access to formal financial services is limited to 20-50% of the population. These numbers capture not only the poor, but also the near poor who have difficulty accessing the formal market.

The banking sector contributes to economic development in four ways: 1. Directly provides economic and social benefits by being a successful business,

employer and corporate citizen2. Indirectly provides these benefits by enabling other businesses to succeed

through the provision of credit and through the banking system which lowers transaction costs

3. Directly alleviates poverty and contributes other social benefits by providing access to basic banking services in a formal market and acting as a force of inclusion

4. Indirectly provides these benefits by enabling other inclusive businesses and impact investors through the provision of credit

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Overview of Consumer and Micro-Finance

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Credito Familiar MexicoConsumer Finance operation with 246 branches & robust infrastructure acquired in 2012Leverages Peru’s CMF expertisePositioned to serve lower-income segment:

• 16 million households

CrediScotia CrediScotia launched in Peru in 2009 and now services Peru, Chile, Mexico, DR and JamaicaDiversified product suite for micro-business owners, lending funds for working capital, acquiring business premises and buying equipmentProvides free financial literacy programs to clients and non-clients

Consumer FinanceBorrowing to purchase consumer goods such as furniture & appliancesLoan size: $300-$2,000

Micro-financeBorrowing for working capital, inventory or other business needsLoan size: $1,000-$6,000

In August 2012, Scotiabank located its segment management team in Peru, our centre of

expertise on CMF. The team will lead Scotiabank’s strategic direction in CMF

across our international footprint.

AffluentAffluent 6% 4% 8% 3% 2%

29% 15% 15% 32% 11%

37% 53% 57% 41% 38%

Mass MarketMass Market

Consumer & Micro FinanceConsumer &

Micro Finance

UnbankedUnbanked 28% 20% 24% 49% 28%

Significant share of population & economy

Nearly 50% of LATAM’s +200MM population, and 30% of the Purchasing Power, is concentrated in this segment

MexicoMexico PeruPeru ChileChile ColombiaColombia Dominican Republic

Dominican Republic

Total Total 100% 100% 100% 100% 100%

(% of Local Population)

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Additional thoughts on partnerships

Investment climate: Already attractive and mature. Continue to develop strengths by emphasizing the following:Transparency, consultation, legal certainty and dispute settlementDon’t compete, do research, fill gaps and graduate to the private sectorPolicy continuity and coordination (regulatory harmonization or mutual recognition)

Corporate Social Responsibility: Opportunities for better coordination and joint efforts across governments, NGOs and private sector actors on common causes, building on the respective strengths of the public and private sector

Inclusive growth: Doesn’t work if it’s high risk, low return:CMF is a for-profit, self-funded business – no interest in subsidy but sustainable profits are necessary for stability and scalability High transaction costs coordinating multiple agencies and respective rolesMarket need is in area of risk mitigationInvest in infrastructure to facilitate market-formation in the financial sector (e.g., secured transactions reform, payments and clearing, risk-sharing)Increase capacity for spillover through literacy, training, technical assistance

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