The old saying goes, never put all your eggs in one basket. The response, meanwhile, is that you should do just that but then watch that basket like a hawk. That’s the plan that Scotiabank (TSE:BNS) (NYSE:BNS) is taking, and it’s not sitting well with investors, who sent shares down modestly in Wednesday afternoon’s trading. Basically, Scotiabank is planning a consolidation, emptying the eggs from some baskets and pulling them into others. It may get out of some foreign markets altogether and instead focus its efforts on North American operations.
Indeed, word from CEO Scott Thomson suggests that Scotiabank will put 90% of its capital into Canada, Mexico, and the United States. Much of the remaining 10% in Latin American markets will be scrutinized more closely and potentially redirected. Chile and Peru will be more closely watched, while Colombia and Central America will be largely left to sink or swim on their current funding levels.
Troubles at Home Make a Pivot More Necessary
It would be easy to wonder here why Scotiabank is suddenly pivoting. One cause may be a growing threat of cybercrime going on right in its own front yard. Recently, one bank customer, Sunjit Lidhar, lost $5,000 to a cyber attack on Scotiabank. The result was an intense fight between Lidhar and Scotiabank, who, for at least a while, believed Lidhar was behind the missing money. Lidhar, meanwhile, asserted his innocence and fought back. Eventually, after a six-month battle, Scotiabank offered to reimburse Lidhar and may want to work toward preventing such an outcome again.
Is Scotiabank Good to Invest In?
Turning to Wall Street, analysts have a Hold consensus rating on BNS stock based on eight Holds assigned in the past three months, as indicated by the graphic below. After a 5.11% loss in its share price over the past year, the average BNS price target of C$61.12 per share implies 0.84% downside risk.
