Bank of Nova Scotia to buy majority stake in Colombia's Banco Colpatria for $1 billion

Bank of Nova Scotia (Scotiabank) yesterday said that it will buy a majority stake in Colombia's unlisted Banco Colpatria, for about $1 billion in cash and stock, in order to expand into the Latin American country.

The Canadian bank is buying 51 per cent of Colombia's fifth-largest financial group by paying $500 million in cash and 10 million in shares.

Toronto-based Scotiabank, Canada's third-largest bank, has been expanding in Latin America and entered Colombia last year with the acquisition of Royal Bank of Scotland's wholesale operations in the country.

The deal gives Scotiabank a large retail banking presence in Colombia with 175 branches and 308 ATMs. It also gives the Canadian lender the right to choose several key executives, including the deputy chief executive officer, the chief financial officer, chief risk officer and auditor.

Mercantil Colpatria, one of Colombia's largest conglomerate, which owns the remaining 49 per cent of Banco Colpatria, has the choice to sell its entire stake to Scotiabank in seven years. Banco Colpatria, with assets of $6.2 billion and deposits of $4.2 billion as of September 2011, is one of the country's leading lenders with a positive track record of growth. The bank is the second largest credit card issuer in Colombia and also offers commercial and consumer loans and home mortgages.

Scotiabank said it will combine its wholesale business in Colombia into Banco Colpatria's existing operations.

"We are very pleased to have found a solid partner in Scotiabank and are sure that this long-term agreement will greatly benefit our customers and employees," said Eduardo Pacheco, president of Mercantil Colpatria. "With this alliance, we bring together our strengths and Scotiabank's expertise in risk and capital management, wholesale banking operations and solid network in Central and South America."
 
"We are pleased to be partnering with Mercantil Colpatria a well-established and well-regarded Colombian conglomerate that has successfully led the growth of Banco Colpatria for more than 40 years," said Rick Waugh, president and CEO of Scotiabank.