Bank of Nova Scotia (Scotiabank) told staff on Tuesday it would close its metals business, drawing the curtain on one of the most venerable names in precious metals trading, two sources familiar with the matter told Reuters.
Scotiabank became a big player in metals trading in 1997, when the it bought Mocatta Bullion from Standard Chartered PLC. Mocatta was founded in 1684 and, when Scotia bought it, it had 180 employees and 10 offices around the world in locations including New York, London, New Delhi, Hong Kong, Shanghai and Singapore.
Scotiabank’s prominence in the market segment continued to rise and in 2004 it became the first non-British bank to chair the London Gold Fixing. That year, Scotia’s chief executive was photographed proudly holding a gold bar to celebrate the bank’s stature.
The bank sharply downsized the business in 2018 after a strategic review and an unsuccessful attempt to find a buyer.
But it remains one of the five banks that settle gold trades and one of 12 market makers that provide liquidity in the London market. It is also a participant in daily auctions that set a globally used gold benchmark price.
“Scotia had a global call with all its metals staff and said it was shutting down its metals business,” said one of the sources.
“The plan is to unwind the metals business,” said another.
A spokeswoman for Scotiabank declined to comment.
Sources said Scotia would not take on new business and would wind down existing activities by around the beginning of 2021. Some staff would be kept on over that period while others would be made redundant, they said.
Around 15 people worked in Scotia’s metals business, industry sources said, around three-quarters of them in precious metals and the remainder in industrial metals. That compares to around 140 five years ago, the sources said.
In the last few years, Scotiabank’s precious metals operation had become a target of lawsuits in Canada and the United States along with the group of international financial institutions that took part in the London Gold Fixing. In class action lawsuits, the banks, including Deutsche Bank AG, Société Générale SA, Barclays PLC, HSBC PLC and Scotiabank, were accused of manipulating the gold market, which is worth trillions of dollars in trading value per year.
A smaller subset, including Scotiabank, was also accused of manipulating the silver market by rigging the daily Silver Fix.