Scotiabank set to buy and merge in Peru

Agrees to pay out $390 million for Banco Wiese Plans combination with part-owned banking subsidiary

The Bank of Nova Scotia plans to invest $390 million in Peru as part of a plan to merge two Peruvian banks into a bigger financial company able to help the Toronto-based institution expand its Latin American business.

Scotiabank will use the money to acquire about 80 per cent of Peru’s Banco Wiese from its Italian parent and then merge the purchased operation with Scotiabank’s own 35 per centowned Banco Sudamericano subsidiary. The deal is subject to final approvals. The pact would result in the creation of Peru’s third- biggest bank, with Scotiabank owning 80 per cent of the new company and Banca Intesa the remaining 20 per cent, the Toronto bank added yesterday.

“ We have been part of the Peruvian market for eight years, and we see great potential in this market,” said Rick Waugh, Scotiabank’s president and chief executive officer.

“ We look forward to finalizing the agreement and building on our presence in this country.”

Scotiabank is already Canada’s most international bank, with major operations in the Caribbean and Latin America. Banca Intesa will invest $266 million ( U. S.) for the company’s 20 per cent stake in the combined bank, giving the merger transaction a value of almost $600 million.

“ This agreement demonstrates our commitment to grow the bank through strategic acquisitions in key markets in Latin America,” said Waugh.

Giovanni Boccolini, head of Intesa’s international operations, said Scotiabank is the right partner for the Italian bank as it tries to strengthen its Banco Wiese Sudameris unit.

“ Given BWS’s relevance to the Peruvian banking system, Banca Intesa was looking for a partner that could further strengthen Banco Wiese BWS, and pursue with us the interests of the Peruvian economy in ensuring the stability of its banking system and the interests of customers and employees in preserving BWS as a prominent banking institution,” Boccolini said. The agreement continues a series of recent Latin American investments by Scotiabank, including expansions in Mexico, the Dominican Republic, Puerto Rico and El Salvador.

“ Over the last eight years, we have become very familiar with Scotiabank and welcome their move to take majority ownership of Banco Sudamericano,” said Roberto Calda, chairman of the Peruvian bank.

“ Scotiabank has developed an understanding of the Peruvian market that will enable them to continue to serve our customers with excellent products and services.”

Scotiabank is one of Canada’s biggest financial companies, with more than 50,000 employees and $ 314 billion ( Canadian) in assets. The Canadian institution is the biggest bank in the Caribbean and also operates in Mexico, El Salvador, the Dominican Republic, Puerto Rico, Costa Rica, Panama and Chile.