UPDATE 3-Scotiabank names Porter president, seen as heir apparent

Wed Oct 31, 2012 4:12pm EDT

* Seen as likely successor to CEO Rick Waugh

* Waugh said in April he had no plan to step down soon

* Dieter Jentsch to replace Porter as int'l banking head

By Cameron French

Oct 31 (Reuters) - Bank of Nova Scotia has appointed Brian Porter to the role of president, Canada's No. 3 bank said on Wednesday, a move that suggests he will eventually succeed longtime Chief Executive Rick Waugh.

Porter, 54, who joined the Toronto-based bank in 1981, is currently group head of its strategically important international banking division, which has operations in about 50 countries through Latin America and Asia.

He will officially take over as president on Thursday and report to Waugh, who had been both president and CEO. Dieter Jentsch, currently the bank's executive vice president for Latin America, will take over Porter's role as head of international banking.

Waugh, 64, who has held the bank's top job since 2003, told Reuters in April that he had no imminent plans to step down.

But CIBC World Markets analyst Robert Sedran said Porter's promotion indicates he'll be the bank's next CEO.

"I think it's pretty clear that that's the next step. I'm expecting somewhere in the area of a one-year transition period and then Brian will be named president and CEO," he said.

Indeed, the pattern is familiar, as Waugh took on the role of president in January 2003, then added the role of CEO later that year.

In an interview, Porter wouldn't speculate on whether he was destined for the top job. Asked about the bank's best avenue for growth, he pointed to Scotiabank's footprint in Latin America and Asia, both areas of high economic growth.

"We have a great footprint and lots of opportunities to grow our business, both organically and selectively by acquisitions," he said.

Scotiabank has made several small international acquisitions in the wake of the 2008 financial crisis, but it has also grown domestically. Last month, it agreed to buy the Canadian online banking operations of ING Groep for C$3.1 billion ($3.1 billion).

CHINA EXPANSION

In its international growth, it has run into hiccups in its attempt to acquire a 20 percent stake in China's Bank of Guangzhou.

Scotiabank had initially expected to close the C$719 million acquisition last year, but the process has dragged on, and has come under increased attention as Canada's government reviews a $15.1 billion takeover bid by China's CNOOC Ltd for Canadian oil company Nexen Inc.

Porter, who said he was in Guangzhou 10 days ago, would not comment on the perception in some circles that approvals for the deals may be connected, but said the deal was progressing.

"This is going to sound obvious, but things in China do take longer for a variety of reasons. China is a country that is going through a political change right now. In North America, we all like to deal with set deadlines. It doesn't work that way in China," he said.

National Bank Financial analyst Peter Routledge said Porter would have big shoes to fill if he does replace Waugh.

He notes that under Waugh, the bank's dividend yield has risen to 4.2 percent from 3.0 percent, its market capitalization has nearly doubled, and its annualized total return to shareholders has been 10 percent.

"(It's) a stellar performance considering his term coincided with the greatest global financial crisis since the Great Depression," Routledge said in a note.

If Waugh does step down next year, it may signal an exodus of CEOs at Canada's big banks as some of them have been in their jobs for roughly a decade.

Toronto-Dominion Bank CEO Ed Clark, who has been in his job since 2002, said in April he expects to retire in the next few years. Royal Bank of Canada CEO Gord Nixon has not signaled a readiness to step down, but at 11 years, his tenure exceeds that of both Clark and Waugh.

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