- Transfer of Colombia,
Costa Rica and Panama businesses to Davivienda will create a
bank with greater scale in each market.
- Scotiabank to receive an approximate 20% ownership stake in
Davivienda on a pro forma basis.
- With this agreement, Scotiabank continues to execute against
its five-year plan to improve profitability across its
International Banking markets.
- This transaction is capital neutral overall with potential
upside to earnings in future years, while significantly reducing
operational complexity.
TORONTO, Jan. 6, 2025
/CNW/ - Scotiabank announced today it has entered into an agreement
with Davivienda to transfer Scotiabank's banking operations in
Colombia, Costa Rica and Panama to Davivienda. As part of the
transaction, Mercantil Colpatria will sell its interest in
Scotiabank Colpatria in Colombia.
The transaction supports Scotiabank's operational efficiency
efforts in its noncore markets and strengthens Scotiabank's
strategic focus on building a connected value proposition focused
on client primacy across its growth markets in the North American
corridor and Latin America. The
transaction also provides Scotiabank with the opportunity to
participate in a business with a proven management team that will
be well-positioned to become a leading franchise through increased
scale, synergies and an expanded client base. Scotiabank and
Davivienda intend to enter into a mutual referral agreement that
will provide the opportunity for Scotiabank to continue to support
Corporate, Wealth and Global Banking and Markets clients with its
services across Davivienda's footprint.
"With this agreement, we advance our execution plan towards
sustainable and higher returns across our International Banking
markets," said Francisco
Aristeguieta, Group Head, International Banking, Scotiabank.
"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."
Davivienda is a financial institution with over 50 years of
experience and is one of the most recognized banks in Latin America for its innovation and digital
capabilities with operations in Colombia, Costa
Rica, El Salvador,
Honduras, Panama and Miami, serving more than 24.6 million
clients.
Transaction Highlights:
Subject to the receipt of
regulatory approvals in the relevant jurisdictions, the completion
of the transaction is expected to occur in approximately 12 months
from signing.
Scotiabank will receive a combination of newly issued common and
preferred shares reflecting an approximate 20% equity ownership
stake in the newly combined entity. As part of the agreement,
Scotiabank will have the right to designate individual(s) to serve
on the Board of Directors of Davivienda's combined operations
commensurate with its ownership stake.
Scotiabank's operations that are part of this transaction will
now be considered held for sale for accounting purposes, and an
after-tax impairment loss of approximately CAD$1.4 billion will be recognized in the first
quarter of 2025. This is expected to reduce Scotiabank's Common
Equity Tier 1 ("CET1") ratio by approximately 10-15 basis points.
In addition, there may be changes to the loss up to closing from
changes in the value of the shares received and carrying value of
the assets being sold.
We estimate that additional losses of approximately CAD$0.3 billion will be recorded on closing
primarily relating to cumulative foreign currency translation
losses.
At closing, Scotiabank's investment in Davivienda will be
recorded as an investment in associate for accounting purposes. The
CET1 ratio is expected to benefit an approximate 10-15 basis
points, primarily from the reduction in risk-weighted assets.
About Scotiabank
Scotiabank's vision is to be our clients' most trusted financial
partner and deliver sustainable, profitable growth. Guided by our
purpose: "for every future," we help our clients, their families
and their communities achieve success through a broad range of
advice, products and services, including personal and commercial
banking, wealth management and private banking, corporate and
investment banking, and capital markets. With assets of
approximately $1.4 trillion (as at
October 31, 2024), Scotiabank is one
of the largest banks in North
America by assets, and trades on the Toronto Stock Exchange
(TSX: BNS) and New York Stock Exchange (NYSE: BNS). For more
information, please visit www.scotiabank.com and follow us on X
@Scotiabank.
Forward-looking statements
From time to time, our
public communications include oral or written forward-looking
statements. Statements of this type are included in this document,
and may be included in other filings with Canadian securities
regulators or the U.S. Securities and Exchange Commission (SEC), or
in other communications. In addition, representatives of the Bank
may include forward-looking statements orally to analysts,
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pursuant to the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation. Forward-looking statements may
include, but are not limited to, statements made in this document,
the Management's Discussion and Analysis in the Bank's 2024 Annual
Report under the headings "Outlook" and in other statements
regarding the Bank's objectives, strategies to achieve those
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By their very nature, forward-looking statements require us to
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We caution readers not to place undue reliance on these
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our control and effects of which can be difficult to predict, could
cause our actual results to differ materially from the
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The future outcomes that relate to forward-looking statements
may be influenced by many factors, including but not limited to:
general economic and market conditions in the countries in which we
operate and globally; changes in currency and interest rates;
increased funding costs and market volatility due to market
illiquidity and competition for funding; the failure of third
parties to comply with their obligations to the Bank and its
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information, and other risks arising from the Bank's use of third
parties; changes in monetary, fiscal, or economic policy and tax
legislation and interpretation; changes in laws and regulations or
in supervisory expectations or requirements, including capital,
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effect of such changes on funding costs; geopolitical risk; changes
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global economy of war, conflicts or terrorist actions and
unforeseen consequences arising from such actions; technological
changes, including the use of data and artificial intelligence in
our business, and technology resiliency; operational and
infrastructure risks; reputational risks; the accuracy and
completeness of information the Bank receives on customers and
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products and services, and the extent to which products or services
previously sold by the Bank require the Bank to incur liabilities
or absorb losses not contemplated at their origination; our ability
to execute our strategic plans, including the successful completion
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approvals; critical accounting estimates and the effect of changes
to accounting standards, rules and interpretations on these
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Bank is exposed; anti-money laundering; disruptions or attacks
(including cyberattacks) on the Bank's information technology,
internet connectivity, network accessibility, or other voice or
data communications systems or services, which may result in data
breaches, unauthorized access to sensitive information, denial of
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operate, including through internet and mobile banking and
non-traditional competitors; exposure related to significant
litigation and regulatory matters; environmental, social and
governance risks, including climate change, our ability to
implement various sustainability-related initiatives (both
internally and with our clients and other stakeholders) under
expected time frames, and our ability to scale our
sustainable-finance products and services; the occurrence of
natural and unnatural catastrophic events and claims resulting from
such events, including disruptions to public infrastructure, such
as transportation, communications, power or water supply;
inflationary pressures; global supply-chain disruptions; Canadian
housing and household indebtedness; the emergence or continuation
of widespread health emergencies or pandemics, including their
impact on the global economy, financial market conditions and the
Bank's business, results of operations, financial condition and
prospects; and the Bank's anticipation of and success in managing
the risks implied by the foregoing. A substantial amount of the
Bank's business involves making loans or otherwise committing
resources to specific companies, industries or countries.
Unforeseen events affecting such borrowers, industries or countries
could have a material adverse effect on the Bank's financial
results, businesses, financial condition or liquidity. These and
other factors may cause the Bank's actual performance to differ
materially from that contemplated by forward-looking statements.
The Bank cautions that the preceding list is not exhaustive of all
possible risk factors and other factors could also adversely affect
the Bank's results, for more information, please see the "Risk
Management" section of the Bank's 2024 Annual Report, as may be
updated by quarterly reports.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 2024
Annual Report under the headings "Outlook", as updated by quarterly
reports. The "Outlook" and "2025 Priorities" sections are based on
the Bank's views and the actual outcome is uncertain. Readers
should consider the above-noted factors when reviewing these
sections. When relying on forward-looking statements to make
decisions with respect to the Bank and its securities, investors
and others should carefully consider the preceding factors, other
uncertainties and potential events.
Any forward-looking statements contained in this document
represent the views of management only as of the date hereof and
are presented for the purpose of assisting the Bank's shareholders
and analysts in understanding the Bank's financial position,
objectives and priorities, and anticipated financial performance as
at and for the periods ended on the dates presented, and may not be
appropriate for other purposes. Except as required by law, the Bank
does not undertake to update any forward-looking statements,
whether written or oral, that may be made from time to time by or
on its behalf.
Additional information relating to the Bank, including the
Bank's Annual Information Form, can be located on the SEDAR+
website at www.sedarplus.ca and on the EDGAR section of the SEC's
website at www.sec.gov.
SOURCE Scotiabank