Bank of Nova Scotia is reportedly planning to re-establish the metals trading desk it closed during the peak of the pandemic. This move comes as metal prices have seen significant increases. The bank is actively seeking to hire commodities traders, sales specialists, and strategists to staff the new unit.
This decision marks a return to a business that Scotiabank largely exited in 2020 due to regulatory pressures and declining profitability. The bank had previously downsized and then formally announced the shutdown of its metals business, including the historic ScotiaMocatta operations, citing escalating compliance costs, U.S. investigations into trading practices like spoofing, and increased capital requirements. The wind-down resulted in a C$232 million ($168 million) impairment charge in its 2020 second-quarter results.
Despite the previous exit, the ScotiaMocatta trademark remained associated with Scotiabank's metals businesses. The initial focus of this revival is expected to be on precious metals, with potential future expansion into base metals. This strategic shift aims to leverage the current robust commodity market environment.
