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Scotiabank not overly concerned by Mexico election as bank maps out growth plans: CEO

Written by on June 6, 2024

TORONTO — The head of Scotiabank says he’s not overly concerned with the election result in Mexico, a key area of focus for growth at the bank.

Speaking at a Canadian Club Toronto event on Thursday, Scott Thomson said the election of Claudia Sheinbaum as president last weekend was no surprise, but the apparent congressional supermajority was.

“What wasn’t expected was Congress … that’s what’s created a little bit of uncertainty,” he told the audience.

The strength of the election victory — the final results of which are still pending — has raised fears that her party will press forward with constitutional changes that would weaken democratic institutions and make an already hostile business environment in some sectors even worse.

Thomson said he’s reassured by how institutions prevailed after Andrés Manuel López Obrador was elected with a supermajority in 2018, and by the long-term view Scotiabank has with its operations in the country.

He said he’s also impressed by Sheinbaum and that, while she’s left-leaning, thinks she can navigate sticking points around North American free trade.

“She’s very smart, very rational, and will get Mexico to the right place under USMCA.”

It’s also important for the bank to stick with its plans for Mexico because of its significant growth potential ahead, as the near-shoring trend is leading more manufacturing to shift there from China.

Other major Canadian companies are also positioning for more growth in the country, and the integrated North American market, like TC Energy that has bought pipelines there, and Canadian Pacific Kansas City whose rail network spans the three countries.

“We want to be there to support clients,” said Thomson.

In the short-term though, Scotiabank will be “thoughtful” about capital allocation in the country, he said.

Thomson’s remarks were briefly interrupted by two protesters in the Fairmont Royal York ballroom, who raised objections to the bank’s investments in Israeli defence contractor Elbit Systems Ltd., while more protesters blockaded the front door of the hotel.

Scotiabank has noted the investment in Elbit Systems by its 1832 Asset Management portfolio managers is done independent of the bank, unless there are specific investment policies that restrict those decisions.

-With files from The Associated Press.

This report by The Canadian Press was first published June 6, 2024.

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The Canadian Press