Scotiabank to Sell Puerto Rico Operations to OFG Bancorp
June 26 2019 - 5:16PM
Dow Jones News
By Patrick Thomas
Scotiabank (BNS.T) said it's reached a deal to sell its
operations in Puerto Rico and its U.S. Virgin Islands branches to
Oriental Bank, a subsidiary of OFG Bancorp. (OFG).
OFG said it would pay $550 million in cash for the Puerto Rico
operations, and a $10 million deposit premium for the U.S. Virgin
Island branches.
Toronto-based Scotiabank, one of Canada's largest banks by
assets, said it will record a loss of about $400 million Canadian
dollars ($305 million) after-tax in its fiscal third quarter as a
result of the deal.
The bank said the majority of this loss represents the carrying
value of goodwill relating to Puerto Rico. After foreign currency
translation gains and other adjustments, the bank's total loss may
be between C$300 million to C$360, the bank said.
OFG said the deal would boost 2020 earnings by 40% and that it
would fund the deal with excess capital. Scotiabank's Puerto Rico
and U.S. Virgin Island operations had $2.5 billion in net loans,
$3.2 billion in deposits, 21 branches and about 1,000 employees as
of March 31, OFG said.
Shares of OFG rose about 16% during after-market trading.
Scotia bank has been divesting much of its Caribbean assets
since last November when it sold its operations in nine Caribbean
countries and its life insurance businesses in Jamaica and Trinidad
and Tobago, and of its pension administration and related insurance
businesses in the Dominican Republic.
In February, Scotiabank said it would sell its banking and
insurance operations in El Salvador to Imperia Intercontinental
Inc., the main shareholder of Banco Cuscatlan S.A and Seguros e
Inversiones S.A in El Salvador.
When it sold its operations in nine Caribbean countries and its
life insurance businesses in Jamaica and Trinidad and Tobago, and
of its pension administration and related insurance businesses in
the Dominican Republic.
The cumulative impact of those transactions, including the loss
on sale of the operations in El Salvador, were expected to result
in a net after-tax gain of C$250 million, the bank said in
February.
Write to Patrick Thomas at patrick.thomas@wsj.com
(END) Dow Jones Newswires
June 26, 2019 17:01 ET (21:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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