The massive leadership change expected to sweep though Canada's banking sector in the next few years has begun, after Bank of Nova Scotia became the first of the major banks to strongly signal its next CEO.
Brian Porter, a 31-year veteran of Canada's third-largest bank, was named president of the bank on Wednesday, assuming that role from current chief executive officer Rick Waugh. Though Scotiabank executives did not elaborate on their reasons for the move, it is widely seen as setting the stage for Mr. Waugh's eventual departure after nearly 10 years at the helm.
Mr. Porter, 51, most recently ran Scotiabank's international division, which has operations in more than 55 countries from Latin America to Asia. He has been considered a likely successor to Mr. Waugh, who turns 65 in December, for the past few years.
"I'm honoured to be asked to take on this role," Mr. Porter said in an interview, referring to the president's role.
"I'm excited about it, it's a big job." However, he stopped short of acknowledging himself as the person in line for the CEO's chair, which analysts expect Mr. Waugh will fill for at least another year.
The move marks the start of a generational shift in Canadian banking, with corner-office changes expected across the sector over the next few years. The average tenure of the heads of Canada's six largest banks is 8.1 years, which is longer than the global average of 6.6 years for all CEOs, according to a 2010 Booz & Co. survey of 2,500 of the world's largest companies.
Bank succession plans are tracked closely on Bay Street, and the stakes are high, given the multimillion-dollar salaries and economic influence the job brings. Scotiabank's announcement reignited speculation across the sector Wednesday of what paths other banks might take, and when.
Royal Bank of Canada CEO Gordon Nixon and Toronto-Dominion Bank CEO Ed Clark are two executives being watched, given their tenure in the job. At 55, Mr. Nixon is younger than most of his counterparts, but has run Canada's largest bank for more than 11 years, the longest among the Big Six. Mr. Nixon once said a bank CEO should not serve more than a decade. Though in March, when asked if he was planning to step down soon, he admitted he is reconsidering that notion.
At 65, Mr. Clark is also a candidate to hand over the reins in the near future. Mr. Clark acknowledged this spring he is in "the final years of his tenure" but was in no hurry, suggesting he would stay in the job through 2013. In addition to nearly 10 years atop TD, Mr. Clark spent 16 years as CEO of Canada Trust before it was bought by the bank.
A clear indicator of bank succession is how extensively the institution grooms top executives, moving them through the various businesses as they rise up the ladder, as Scotiabank has done with Mr. Porter.
"We see Mr. Porter's appointment as typical of CEO succession plans at other large Canadian financial institutions," analyst Peter Routledge at National Bank Financial said in a research note. "The designated successor spends approximately one year in the president's role, reporting to the incumbent CEO but managing the major business lines."
Before he ran Scotiabank's international operations, Porter was credited with helping steer the bank through the credit crisis as its chief risk officer from 2005 to 2010. Mr. Porter, whose background is in the capital markets, admits his résumé is perhaps lightest in Canadian retail banking, but said the president's role gives him increased exposure to that area. He described his management style as "open" and "collaborative."
Of late, Mr. Porter has also been working with officials in China as Scotiabank seeks to close its previously announced deal to buy a stake in China's Bank of Guangzhou. Approval has been delayed several months, and some have speculated it has become entangled in the political wrangling over China's $15.1-billion bid for Nexen Inc.
"I was in China 10 days ago, I met with senior government officials there, we continue to make headway," Mr. Porter said. "I would just say that we as a bank have been in China for 30 years, you have to have patience. Things take time and we're working toward that end."
The Big Six CEOs
Gord Nixon, 55
Royal Bank CEO for 11 years, 2 months.
Rick Waugh, 64
Bank of Nova Scotia CEO for 9 years, 7 months.
Ed Clark, 65
Toronto-Dominion Bank CEO for 9 years, 10 months.
Gerry McCaughey, 56
CIBC CEO for 7 years, 2 months.
Bill Downe, 60
Bank of Montreal CEO for 5 years, 7 months.
Louis Vachon, 50
National Bank CEO for 5 years, 4 months.