Bank of Nova Scotia, Canada’s third-largest lender by assets, agreed to buy Dresdner Bank Brasil SA to enter the Brazilian investment-banking market.
Scotiabank will be the only Canadian bank in Brazil with multiple banking licenses to provide a range of financial services when the deal closes, the Toronto-based lender said in a statement today. The price wasn’t disclosed.
“We haven’t had a lot of doors open to us in Brazil,” Scotia Capital Co-Chief Executive Officer Stephen McDonald said today in a telephone interview. “We haven’t had an opportunity until now to knock on corporate clients’ doors and look for capital markets business.”
Chief Executive Officer Richard Waugh, 62, has spent about $2 billion in foreign acquisitions since 2007 and has been looking at Brazil for at least a year. International banking, which includes operations in Mexico, the Caribbean and Taiwan, accounted for 37 percent of the bank’s C$3.54 billion ($3.44 billion) in net income in the fiscal year ended Oct. 31.
Scotiabank plans to offer investment-banking services in Brazil for industries including oil and gas, power and mining. The multiple licenses allow it to lend money and offer capital markets and corporate banking-related businesses to local clients, McDonald said.
The purchase “gets Scotiabank greater wholesale banking exposure within Brazil; however, does not help them with retail banking,” Barclays Capital analyst John Aiken said in a note to clients today.
McDonald, 53, said Scotia Capital may look at equity brokerage services “in the future.” He expects to have 50 to 100 employees in Brazil within the first year of the acquisition. Scotiabank has been in Brazil for almost 40 years with a representative office.
The acquisition follows Scotiabank’s purchase of Royal Bank of Scotland Group Plc’s Colombian investment bank in July. The bank has also established investment banks in Peru, Mexico and Chile.
“The Americas region is going to become increasingly important to Scotiabank from a wholesale perspective,” McDonald said.
Dresdner Bank in Brazil, based in Sao Paulo, had assets of $400 million at the end of last year and 50 employees, Scotiabank said. Dresdner is a unit of Commerzbank AG, Germany’s second-biggest bank.
Bank of Nova Scotia fell 46 cents to C$53.29 at 3:43 p.m. on the Toronto Stock Exchange.