Scotiabank announced an agreement to sell its banking operations in nine non-core markets in the Caribbean to Trinidad-based Republic Financial Holdings Limited.
The countries included Anguilla, Antigua, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Vincent & the Grenadines, according to a Scotiabank release.
Republic Financial indicated that it will spend a total of US$123 million for the acquisition.
“The purchase price represents a US$25 million consideration for the total shareholding of Scotiabank Anguilla Limited, and a premium of US$98 million over net asset value for operations in the remaining eight countries,” stated Republic Financial, adding that the purchase price does not include any amounts required to capitalize the businesses.
“These transactions are not financially material to Scotiabank,” said the bank in the release geared at its Canada investors.
The agreement is subject to regulatory approvals and customary closing conditions. Already Prime Minister, Gaston Browne of Antigua & Barbuda has expressed disappointment at the planned deal.
The deal should increase Scotiabank’s common equity tier 1 capital ratio by some 10 basis points upon closing. Tier one common capital ratio is a measurement of a bank’s core equity capital compared with its total risk-weighted assets that signifies its financial strength. Tier 1 common capital excludes any preferred shares or non-controlling interests.
“Due to increasing regulatory complexity and the need for continued investment in technology to support our regulatory requirements, we made the decision to focus the Bank’s efforts on those markets with significant scale in which we can make the greatest difference for our customers,” said Ignacio Deschamps, group head, international banking at Scotiabank in the release.
“Scotiabank is committed to the Caribbean as demonstrated by the Bank’s ongoing investment in products, services and processes to provide an enhanced banking experience to customers across the region,” he added.
Republic Financial is a leading financial group based in Trinidad & Tobago with operations across the Caribbean and Ghana. As part of the proposed deal, Scotiabank employees in the nine countries will join the Republic Group.
Scotiabank’s global banking and markets division acted as exclusive financial advisor to Scotiabank on the transaction. Osler, Hoskin & Harcourt LLP acted as Scotiabank’s legal advisor.
Scotiabank, based in Canada, operates a chain of banks in 50 countries with more than 25 million customers.