Bank of Nova Scotia which trades as Scotiabank continues to scale back its Caribbean and Latin American operations.
The bank has now announced that it’s divesting its operations in Puerto Rico and the US Virgin Islands to Oriental Bank in a deal valued at $US 560 million cash.
Oriental Bank is owned by Puerto Rico-based financial services operation OFG Bancorp.
Scotiabank says the deal is part of a strategy in which it is refocusing on its six key markets.
Last year, Trinidad and Tobago-based Republic Financial Holdings Limited (RFHL), owners of the Republic Bank and related financial services chain, disclosed its intention to take over Scotiabank’s operations in Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, Guyana and St Maarten.
Addressing shareholders earlier this year at their annual general meeting in Toronto, Scotiabank’s CEO, Brian Porter, said they are “focused on strengthening our presence in the markets that we are comfortable operating in, and that provide higher returns for our shareholders.”
Those six core markets are: Canada, the U.S., Mexico, Peru, Chile and Colombia.
Since 2013, Scotiabank has either completely pulled out or is in the process of divesting it presence in around 20 countries, including those in the Caribbean.
According to Porter; “Our divestitures are helping to de-risk the bank, and we are highly focused on their completion.”
But in what seen as an attempt at allaying jitters over the implications of the bank’s withdrawal from areas where it has had a historical presence, the Scotiabank CEO has also said:
“I should note that our footprint will continue to include markets in the Caribbean and Central America, as well as select countries in Europe and Asia, which provide connectivity to the Americas for our corporate and institutional clients.”
But concerns prevail by some governments in the Eastern Caribbean who have expressed the view that local banks should have priority options in acquiring Scotiabank’s divested operations.
The Antigua and Barbuda prime minister Gaston Browne has been particularly vocal about the issue, going as far as to threaten compulsory takeover of the Scotiabank over the planned sale to RFH.
Speaking at the recent session of the Assembly of the Organisation of Eastern Caribbean States (OECS) in the Antigua capital St Johns, Prime Minister Brown called on his fellow leaders to consider a joint purchase of Scotiabank rather than having it fall under the Republic brand.
“I want to put it to this Honourable House that this divestment represents a significant opportunity for the OECS sub-region, and I do not see why we should allow a bank outside of the OECS to be given priority.
“I am of the strong view, the firm view, that the OECS should come together and that we should conjointly purchase all of the Scotia Bank branches,” he declared.
While Scotiabank ‘de-risks’ and scales back its Caribbean operations, the bank is expanding its Latin American portfolio.
It recently announced several acquisitions in Mexico, Peru, Chile and Colombia, the four Latin American countries known as the Pacific Alliance, including the purchase of a majority stake in a Chilean lender.