CI Financial Corp.OTCPK - Current
May 15, 2014, 10:14 AM
- In the green amid a slumping banking sector is Bank of Nova Scotia (BNS +0.5%) after it put its 37% stake in wealth manager CI Financial (CIFAF) on the block (CI is down 6.3% in Toronto trade).
- Opining on the planned sale, CIBC analyst Robert Sedran says until the capital can be redeployed, the move would be dilutive to earnings to the tune of about $175M or $0.03. The sale would, however, boost Scotiabank's capital ratio by between 100 and 125 basis points - a pretty sizable move considering the current ratio is 9.4%, already slightly above the average for Canadian lenders.
- As for what Scotiabank might do with the money, look abroad says Sedran, as he's not seeing "plentiful domestic alternatives."
- Previously: Scotiabank stake in CI Financial on the block
May 15, 2014, 8:38 AM
- Scotiabank (BNS) owns 37% of CI Financial (CIFAF) - Canada's largest independent wealth manager - and is looking to "monetize" its investment after a 44% run for CI's stock since the start of 2013 puts the value of its holdings at $3.8B.
- The move seems counter to the bank's emphasis on wealth management - it accounts for 20% of earnings, up from 3% a decade ago - but management says it can sustain that growth with its own AUM, and notes the purchase of the rest of DundeeWealth for $2.3B in 2011.
- There should be plenty of interest among Canadian banks and life insurers who are eager for more wealth management assets. CIBC (CM) is in the running to buy Russell Investments, and SunLife (SLF) and Manulife (MFC) have devoted more of their resources to asset management. One hitch: Scotiabank needs to find more than one buyer as its agreement with CI states it cannot sell more than 20% of the business to one purchaser.
- "This is a crippling decision they made," says CI chairman Bill Holland, calling himself shocked by the move.
Jun. 13, 2012, 12:35 PMContrary to speculation, Bank of Nova Scotia (BNS) has no plans to sell its 36% stake in Canadian mutual fund company CI Financial, says head of global wealth management Chris Hodgson. If anything, the bank is interested in upping its investment. "We like the asset management business." | Jun. 13, 2012, 12:35 PM
Jan. 5, 2012, 9:03 AMBarclays' John Aiken downgrades the Canadian financial services sector to neutral, expecting domestic and global headwinds to cut into earnings growth. "The steam is dissipating from the Canadian economic engine, with greater downside risk (than forecast)," he writes. Among the individual names cut: BMO, BNS, CM, MFC, RY, SLF, TD. | Jan. 5, 2012, 9:03 AM