Bank of Nova Scotia BNS-T is selling its businesses in Colombia, Costa Rica and Panama to Colombian bank Davivienda as the Canadian lender reallocates capital toward its bet on its North American units.
Analysts and investors have speculated that Scotiabank could divest some of its operations in the Latin America region since chief executive officer Scott Thomson launched his strategic turnaround plan at the outset of his tenure in 2023. The bank will take a 20-per-cent stake in Davivienda and will sit on its board of directors, the Canadian lender said Monday.
“With this agreement, we advance our execution plan towards sustainable and higher returns across our International Banking markets,” Scotiabank head of international banking Francisco Aristeguieta said in a statement. “Davivienda is a proven operator which, through the combined entity, will deliver more scale and become an important partner in supporting our global wealth management and global banking and markets businesses in Colombia and Central America.”
As part of the sale, Scotiabank will post an after-tax impairment loss of about $1.4-billion in the first quarter of 2025. The lender expects this to reduce its common equity tier 1 (CET1) – a measure of a bank’s ability to absorb losses – by about 10 to 15 basis points. (A basis point is one-100th of a percentage point.)
The bank also expects an additional loss of about $300-million from the impact of foreign currency changes when the deal closes.
Scotiabank’s turnaround strategy in part hinges on its bet on growing business opportunities across Canada, the U.S. and Mexico.
The bank intends to enter into an agreement with Davivienda that will allow the banks to refer business to each other. Scotiabank said this will allow it to continue supporting corporate, wealth and capital markets clients with services from the Colombia-based bank.
Davivienda has operated in Latin America for more than 50 years, serving more than 24.6-million clients with operations spanning Colombia, Costa Rica, El Salvador, Honduras and Panama , as well as Miami in the U.S.
The lender also said Monday that the sale of some of its businesses in Latin America is part of its plan to bolster operational efficiency – a metric that assesses a bank’s ability to reduce costs while boosting revenue – in markets that it believes are no longer part of its core business.
Scotiabank expects the deal to receive regulatory approval in the second half of 2025.
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Publish date : 2025-01-05 22:34:00
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