TORONTO and SAN JUAN,
June 26, 2019 /CNW/ - Scotiabank
announced today that it has reached an agreement for the sale of
its operations in Puerto Rico and
the U.S. Virgin Islands ("USVI"),
to Oriental Bank, a subsidiary of OFG Bancorp. The agreement is
subject to regulatory approvals and customary closing
conditions.
"We are pleased to have reached an agreement with Oriental Bank,
a prominent local bank with a strong reputation for providing high
quality products and services to customers. We are confident that
Oriental Bank, with the support of a talented team, will be well
positioned to continue to grow the businesses and provide
continuity to customers and employees in Puerto Rico and the USVI," said Ignacio
(Nacho) Deschamps, Group Head of International Banking and Digital
Transformation at Scotiabank.
Oriental Bank is a diversified financial institution that
provides personal and commercial banking services to customers,
primarily in Puerto Rico. Oriental
Bank was founded in 1964 and is headquartered in San Juan, Puerto Rico. The firm has expanded
over the years as a result of organic growth and strategic
acquisitions. Oriental is committed to broadening its operations
and providing the highest quality of products and services to the
people and businesses of Puerto
Rico and the USVI.
"We're excited about welcoming Scotiabank's valued customers and
the talented team to the Oriental Bank family. We have a similar
culture, attitude and outlook for our businesses and how we regard
and service our customers. We believe the acquisition will make the
combined companies stronger in Puerto
Rico and the USVI with even greater prospects for growth,
profitability and employee engagement," said José Rafael Fernández,
President, Chief Executive Officer, and Vice Chairman of the Boards
of OFG Bancorp and Oriental Bank.
Until regulatory approvals are obtained and the transaction
closes, all operations, branches and products will continue to
operate as usual. Oriental Bank and Scotiabank will work together
to help facilitate a smooth transition for the business.
As a result of this announced transaction and as required under
IFRS, the Bank will record a loss of approximately
$400 million after-tax in Q3 2019 and
will be reported for accounting purposes in the Other segment. The
majority of this loss represents the carrying value of goodwill
relating to Puerto Rico. Upon
closing, an after-tax gain of approximately $50 million will be recorded relating primarily
to accumulated foreign currency translation gains and the premium
received on the USVI operations. These amounts may be subject to
adjustment at closing which may revise the Bank's total net loss to
between $300 million to $360 million after-tax. The transaction will
improve the Bank's credit quality, as it reduces Gross and Net
Impaired Loans, and increases common equity Tier 1 (CET1) ratio by
approximately 5 basis points.
This transaction supports the Bank's strategic decision to focus
on key markets across its footprint. With this transaction - and
others which have previously been publicly announced - the
repositioning of our international footprint will be substantially
complete. Over the last 4 years, the Bank has exited or announced
its intention to exit 19 countries and redeploy approximately
$4 billion of capital to increase the
Bank's scale and market share in key markets. Our sharper
geographic focus allows us to drive sustainable earnings growth in
these key markets, improve earnings quality and the customer
experience while reducing risk.
Credit Suisse and Scotiabank's Global Banking and Markets
Division acted as co-financial advisors to Scotiabank on this
transaction. Sullivan & Cromwell LLP acted as Scotiabank's
legal advisor on the sale.
About Scotiabank
Scotiabank is Canada's
international bank and a leading financial services provider in the
Americas. We are dedicated to helping our more than 25 million
customers become better off through a broad range of advice,
products and services, including personal and commercial banking,
wealth management and private banking, corporate and investment
banking, and capital markets. With a team of more than 99,000
employees and assets of over $1
trillion (as at April 30,
2019), Scotiabank trades on the Toronto Stock Exchange (TSX:
BNS) and New York Stock Exchange (NYSE: BNS). For more information,
please visit www.scotiabank.com and follow us on Twitter
@ScotiabankViews.
About OFG Bancorp
Now in its 55th year in business, OFG Bancorp is a diversified
financial holding company that operates under U.S. and Puerto Rico banking laws and regulations. Its
three principal subsidiaries, Oriental Bank, Oriental Financial
Services and Oriental Insurance, provide retail and commercial
banking, lending and wealth management products, services and
technology, primarily in Puerto
Rico. Visit us at www.ofgbancorp.com.
SOURCE Scotiabank