To portray the recent reorganization of the Bank of Nova Scotia, president and CEO Rick Waugh fixes on the image of a four-legged stool. “It’s very steady and very even,” says Waugh, who has been head of the bank since 2003.

In October, the country’s third-largest bank, as ranked by assets, created a separate global wealth-management unit to stand alongside its existing three divisions — Canadian banking, international banking and Scotia Capital.

Scotiabank is reconfiguring to pursue opportunities in emerging markets abroad while bolstering its strong position at home, Waugh says. In particular, the bank aims to continue to build out its wealth-management business, long a key strategic priority, through both acquisition and organic growth.

Each business line is expected to contribute between 20% and 30% to the bank’s overall income, with no single line dominating the firm’s business model. Half of the bank’s overall income will continue to come from Canada — if domestic retail, wealth management and wholesale are added together — and half from abroad.

“That is a fairly unique diversification [among Canadian banks],” Waugh says.

Scotiabank’s global wealth-management division will combine the bank’s domestic wealth-management business, which had been under the purview of the Canadian banking division, and its smaller foreign wealth business, which had been under international banking. The bank’s insurance and global transaction business also will fall under global wealth management.

Combining domestic and international wealth management will allow Scotiabank to achieve scale, Waugh says, and provide the bank with opportunities to leverage successful strategies across borders.

“We’re at that stage now,” he says, “that wealth management can stand on its own because we have been relatively successful in growing it in Canada and internationally.”

Although Scotiabank has long lagged its Big Five peers in terms of the relative size of its wealth-management business, it has worked hard over the past several years to grow in this area, making acquisitions both large and small, and investing in organic growth.

However, a trio of opportunistic purchases stand out. In 2007, Scotiabank acquired 20% of Dundee-Wealth Inc. and 100% of its Dundee Bank of Canada subsidiary after the Toronto-based wealth manager ran into problems related to the asset-backed commercial paper debacle. In 2008, Scotiabank acquired online brokerage E*Trade Canada Securities Corp. from its distressed U.S. parent. Also in 2008, Scotiabank bought a 37.6% stake in asset manager CI Financial Income Fund from Sun Life Financial Inc.

Ever since those moves, analysts and other industry observers have speculated on how Scotiabank might consolidate its various wealth-management properties and, in particular, when the bank might make a play for all of CI.

“If the creation of the new unit is a sign of a greater focus on wealth management,” says Gavin Graham, global investment strategist with Mississauga, Ont.-based Excel Funds Management Inc., “then the logical next step would be to take out the rest of CI.”

According to a report issued in September by CIBC World Markets Inc. , Scotiabank’s acquisition of the rest of CI would vault Scotiabank into third place among Canada’s mutual fund managers from its current position of ninth.

Waugh declines to indicate what moves Scotiabank might make, but he does say the bank’s stable of wealth-management properties gives Scotiabank a great deal of flexibility.

“One of the great, exciting things about it,” Waugh says, “is we have so many good options.”@page_break@Analysts suggest that Scotia-bank’s main obstacle to buying the rest of CI has been the price — the CIBC World Markets report suggests the cost would be more than $4 billion for the remainder of CI.

As well, Scotiabank could be waiting for a more opportune time to make the move, some industry-watchers suggest.

Waugh says that Scotiabank will never abandon its financial discipline, whether it’s investing in generic growth or in making acquisitions.

However, he did suggest that the CI stake was an important one for the bank: “We truly believe in the relevancy and importance of independent channels. We can’t cover the whole market, so if through partnerships we can get greater access, I think we’re working on ways to make that work for everybody.”

In terms of Scotiabank’s international line, the bank continues to pursue a strategy unique among the Big Five banks, concentrating on acquiring and developing business in emerging markets in Latin America, the Caribbean and Asia rather than building a retail franchise in the U.S., as most of its peers have done.

Scotiabank, which operates in more than 50 countries, has a long history in emerging markets and has developed a “go slow” approach that has served it well over the years, Waugh says: “We take minority positions and we build from that. We try to bring in best practices, which we have as a strong Canadian bank. And then, over time, we actually try to replace all of our ‘expats,’ as we call them, with as many senior-management [people] from the local community because our goal is to be a good local bank in whatever country we’re in.”

Scotiabank mitigates the risk in its international strategy, says CIBC World Markets analyst Robert Sedran, by having stakes in many different countries and regions and by keeping to its incremental approach. Meanwhile, Scotiabank opens itself up to great opportunities by doing business in countries with growing economies and younger populations who typically have been underserved in terms of access to financial services.

“Investing in emerging markets,” Sedran adds, “is the most shareholder-friendly way to deploy excess capital.”

Scotiabank has continued to acquire banks strategically in the context of a global economy that continues to be volatile and as international peers seek capital, in part to meet new global banking regulatory requirements.

In April, Scotiabank bought R-G Premier Bank of Puerto Rico in a deal that featured the support of the U.S. Federal Deposit Insurance Corp. This autumn, Scotiabank bought a wholesale banking unit in Brazil, a corporate and commercial division in Chile, and a wealth-management business in Panama and the Cayman Islands — all from Europe-based banks looking to divest themselves of non-core assets.

One country Scotiabank has so far noticeably avoided is the U.S., where the bank does not have a retail banking presence. Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal all have significant U.S. retail operations.

It’s not been for lack of opportunity, Waugh says: “Through the crisis of the past three years, every investment bank in the U.S. was knocking on our doors, because we had the capacity and we weren’t there. And we seriously looked, even though it wasn’t in our strategy. But, again, because prices of banks looked awfully cheap, we did significant due diligence — significant due diligence — but we decided not to invest. And I’m still very happy with that decision.”

Waugh says that the U.S. banking industry faces a long road of reregulation, including dealing with the implications of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The U.S. economy is also four or five years away from recovery, Waugh says. These factors prove Scotiabank made the right choice in staying on the sidelines regarding the U.S. market.

“We could have bought at 10¢ on the dollar,” Waugh says, “[but] that would have been a very expensive 10¢.” IE