THE Bank of Nova Scotia (Scotiabank) has announced plans to exit its operations in Colombia, Costa Rica, and Panama, transferring these businesses to Banco Davivienda S.A. As part of the agreement, Scotiabank will acquire a 20 per cent stake in the Colombian bank.

The move aligns with Scotiabank’s ongoing strategy to consolidate operations and redirect resources toward high-growth markets such as North America and key South American regions.

The decision comes after years of underperformance in these markets. Over the past six years, Scotiabank has streamlined its international banking segment by exiting several Caribbean markets, winding down operations in India and Malaysia, and divesting certain associate businesses. Recently, the bank invested US$2.8 billion to acquire a 14.9 per cent stake in KeyCorp, a US-based regional bank.

Francisco Aristeguieta, group head of international banking at Scotiabank, stated, “With this agreement, we advance our execution plan toward sustainable and higher returns across our international banking markets. Davivienda is a proven operator which, through the combined entity, will deliver more scale and become an important partner in supporting our Global Wealth Management and Global Banking and Markets businesses in Colombia and Central America.”

The transaction is subject to regulatory approval in all three countries and is expected to close within 12 months. Upon completion, Scotiabank will receive a combination of common and preferred shares in Banco Davivienda S.A., granting it a 20 per cent ownership stake. Banco Davivienda will become an associate company of Scotiabank, with both banks entering a mutual referral agreement to support corporate and wealth management clients across their networks. Davivienda operates in Colombia, Costa Rica, El Salvador, Honduras, Panama and Miami.

Scotiabank currently owns 55.98 per cent of Scotiabank Colpatria S.A. in Colombia. The remaining equity held by Mercantil Colpatria will also be sold as part of the deal. Additionally, Grupo BNS de Costa Rica S.A., a wholly owned subsidiary of BNS International (Bahamas) Limited, and The Bank of Nova Scotia (Sucursal de Panamá), a branch of Scotiabank, will be included in the transfer. These entities are now classified as held-for-sale assets, resulting in an after-tax impairment loss of CA$1.4 billion (US$980 million). Despite this write-down, the transaction is expected to have a neutral impact on Scotiabank’s Common Equity Tier One (CET1) ratio.

According to Davivienda’s financial disclosures, the acquired businesses hold US$16.8 billion in total assets, including US$12.4 billion in loans backed by US$12.8 billion in deposits and US$1.5 billion in equity. The transaction would make Scotiabank the largest shareholder ahead of Inversora Anagrama Inveranagrama S.A.S. Post-transaction, Davivienda’s consolidated asset base will increase to US$59.7 billion with a loan book of US$45.5 billion. The bank will have 27.4 million customers.

Scotiabank’s Colombian operations reported CA$286 million in revenue for Q4 2024 but achieved only CA$4 million in net income attributable to shareholders (NIAS), reflecting a return on equity (ROE) of 1.2 per cent. Meanwhile, its Central American operations contributed CA$113.76 million to Q4 revenue but delivered only 3.2 per cent ROE.

Scotiabank’s Caribbean and Central America operations delivered varied performance in the fourth quarter, with revenue and profitability largely driven by its English-speaking Caribbean markets. The Central American segment, which includes Panama and Costa Rica, accounted for 18 per cent of the CA$632 million in total revenue generated by the segment, contributing CA$113.76 million. However, its profitability lagged, delivering just 6 per cent of the CA$171 million in net income attributable to shareholders (NIAS) for the quarter, with a return on equity (ROE) of 3.2 per cent.

The English-speaking Caribbean, encompassing key markets such as Jamaica, Trinidad & Tobago, the Bahamas, and Barbados, dominated results. This subregion contributed 68 per cent of total revenue and 86 per cent of NIAS for Q4, amounting to CA$147.06 million in net income with a robust ROE of 51.8 per cent. Meanwhile, the Dominican Republic accounted for 14 per cent of revenue.

Scotia Group Jamaica Limited (SGJ), a 71.78 per cent-owned subsidiary of Scotiabank, reported a return on average equity of 18.22 per cent during the quarter.

Despite this divestment strategy, Scotiabank remains committed to growth within the Caribbean region under its five-year plan led by CEO Scott Thomson. The bank aims to strengthen client relationships and improve operational efficiency across its footprint.

“We are closely monitoring policy actions from the new administration in Mexico as well as the incoming US administration. While new governments often bring initial uncertainty with respect to trade policies, we believe policy will ultimately support a cooperative environment that encourages capital investment and continued regional growth. We continue to believe in the long-term economic growth potential of the North American corridor and the strategic value that connectivity among Canada, the US and Mexico will provide to our clients and to the long-term success of the bank,” said Thomson on the December 3 earnings call.

Scotiabank announced Jamaican native Anya Schnoor as its new executive vice-president (EVP) for global insurance on November 1 as it renews its focus on that business line.

“We’re going to capture more of the Caribbean market. We’ve been in the Caribbean for 200 years. We were in Jamaica before we were in Toronto as a matter of fact. We have 2 million clients in the English-speaking Caribbean. We are an aspirational brand. We are a dominant force in the English-speaking Caribbean, but you know what, we can do a lot more with those clients than what we are doing today, and we will,” said Aristeguieta, Scotiabank’s international banking head, at the December 2023 investor day.

Scotiabank’s first-quarter earnings report is scheduled for February 25, followed by its annual shareholders meeting on April 8 in Halifax, Nova Scotia. The bank will distribute a quarterly dividend of CA$1.06 per share on January 29. Scotia Group Jamaica and Scotiabank Trinidad & Tobago will pay J$0.45 on January 24 and TT$0.70 on January 13, respectively.

Meanwhile, Perrin Gayle, EVP of retail and small business banking and acting head of retail (Caribbean and Central America) at SGJ, has resigned effective January 24, 2025. His portfolio will be taken over by Yvett Anderson, the current director of customer experience & advocacy in the interim. Gayle was appointed on November 1 to the acting head of retail role for the Caribbean and Central America.