Abstract
This case study traces ScotiaMocatta's journey from its acquisition by Scotiabank in 1997 to its peak in 2012 and decline leading to closure in 2020. It explores the bullion banking industry, including key functions, risks and products offered. The role of the London Bullion Market Association and the distinction between allocated and unallocated accounts are discussed. The case highlights the challenges faced by the bullion banking division, including lawsuits, operational challenges and issues related to a potential gold short position concentration. It concludes by presenting potential options that Scotiabank could have considered before deciding to close the division.
Additional Information
| Product Type | Case |
|---|---|
| Reference No. | IGPC0001 |
| Title | The Rise and Fall of Bullion Banking at Scotiabank |
| Pages | 23 |
| Published on | Dec 2, 2024 |
| Year of Event | 2020 |
| Authors | Narayanaswami, Sundaravalli; Agarwal, Anmaya; |
| Area | India Gold Policy Centre (IGPC) |
| Discipline | Economics, International Business, Strategic Management |
| Sector | Banking Finance Insurance (BFI) |
| Learning Objective | 1. Understand the fundamentals of bullion banking, including its role in the financial ecosystem, primary products and associated risks. 2. Analyse the dynamics of the precious metals market, including the significance of institutions like the LBMA and the concepts of allocated and unallocated accounts. 3. Evaluate the factors that contribute to the growth and decline of a specialised banking division within a larger financial institution. 4. Assess the impact of legal and regulatory challenges on a bank's operations and strategic decision-making in the context of commodity trading. 5. Examine the risks associated with concentrated positions in commodity markets and their potential consequences for financial institutions. 6. Develop and critically evaluate strategic options for a struggling business unit within a bank, considering both internal and external factors. |
| Keywords | Bullion; Banking; Scotiabank; LBMA; Precious Metals |
| Country | Canada |
| Organization | Scotia Bank |
| Access | For All |
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