Scotiabank offers $2.9B for majority stake in Chilean bank

TORONTO The Bank of Nova Scotia is doubling down on Chile with a $2.9-billion offer to buy a majority stake in a Chilean bank, as the lender’s latest quarterly profits rose despite a drop in trading revenues, natural disasters and a flying loonie.

Scotiabank said Tuesday it has submitted a binding offer to acquire Banco Bilbao Vizcaya Argentaria, S.A.’s (BBVA) interests in its Chilean banking operation, BBVA Chile, and certain subsidiaries.

If the deal goes through, it would double Scotiabank’s market share in Chile to roughly 14 per cent and make the Canadian lender the third-largest non-state owned bank in the country, it added. The bank said the transaction is in line with its strategy to increase its scale within the Chilean banking sector and the high-growth Pacific Alliance countries, which also includes Mexico, Peru and Colombia.

“This is a high-quality asset bank,” Scotiabank’s president and chief executive Brian Porter told analysts on a conference call. “It’s very well run . ... We think it’s a good fit of assets, and will be a good fit of people and technology.”

BBVA owns about 68 per cent of BBVA Chile — which has $29 billion in assets and has 4,000 staff at 127 branches — and its minority partner, the Said family, owns about 32 per cent. Scotiabank added that BBVA is willing to accept the deal if the Said family does not exercise its right of first refusal under a shareholders agreement.

The $2.9-billion offer came hours before Scotiabank posted fourth-quarter earnings of $2.07 billion in net income, or $1.64 diluted earnings per share, for the three months ended Oct. 31, up from $2.01 billion, or $1.57, during the same time last year.

Canada’s third-biggest lender was the first of the country’s biggest banks to report its fourthquarter earnings. Scotiabank posted net interest income, or the profit generated from loans, of $3.83 billion, up five per cent from a year earlier. Its latest quarter was helped by its Canadian banking division, with net income attributable to shareholders up by 12 per cent to $1.06 billion.

Still, these spikes were offset by a 15-per-cent drop in Q4 net income in its global banking and markets unit to $391 million.