Bank of Nova Scotia, Canada’s third- largest bank, agreed to buy Nuevo Banco Comercial and consumer- finance company Pronto! to become the first Canadian bank with a branch network in Uruguay.
Nuevo Banco has 49 outlets in Uruguay and about C$1.2 billion ($1.19 billion) in deposits, Toronto-based Scotiabank said today in a statement. The price for the 100 percent stake wasn’t disclosed.
Scotiabank Chief Executive Officer Richard Waugh has spent about $2 billion on acquisitions since 2007 at the international banking unit, which accounted for about a third of profit in the year ended Oct. 31. The lender has operations in about 50 countries, including Peru, Chile and Mexico.
The purchases are “consistent with its international acquisitions strategy of building out its Latam banking network through small, accretive acquisitions,” Morgan Stanley analyst Cheryl Pate said today in a note.
Nuevo Banco Comercial has an 11 percent share of Uruguay’s loans and deposits market, ranking fourth among private banks. The purchase will add to Scotiabank’s earnings in the first year, the lender said.
“It provides a natural extension of our operations that we have in Latin America,” said Dieter Jentsch, Scotiabank’s executive vice president of Latin America. “Uruguay continues to impress us with its political stability and its economic fortunes.”
Competitors in the market include Spanish lenders Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, and London- based HSBC Holdings Plc, Jentsch said today in a telephone interview. Nuevo Banco offers consumer finance lending, providing small loans to clients who don’t have a banking history.
Scotiabank will use the purchases to expand credit-card accounts, commercial lending and infrastructure financing, Jentsch said.
Scotiabank is buying the Uruguayan lender from a group led by Boston-based private equity firm Advent International Corp. Advent bought Nuevo Banco in 2006 for $167 million, the company said on its website.
Pronto! has 37 branches and 200,000 clients in the South American country of 3.4 million people, Bank of Nova Scotia said. The two organizations have about 700 employees, Jentsch said.
Bank of Nova Scotia rose 49 cents to a record high C$56.12 in 4:21 p.m. trading on the Toronto Stock Exchange.