• Two lenders have held early-stage, informal discussions
  • Scotiabank has operated in Caribbean nation since 1920

Bank of Nova Scotia, Canada’s third-largest lender by assets, is weighing a bid for Dominican Republic’s Banco Dominicano del Progreso SA, according to people familiar with the matter.

Progreso has held early-stage informal talks with Toronto-based Scotiabank, said the people, who asked not to be identified because the matter is private. No final decision has been made and there’s no guarantee a deal will be reached, they said.

Banco Dominicano del Progreso was founded four decades ago under the name Banco de Boston Dominicano, a division of First National Bank of Boston, according to a document on the company’s website. In the 1980s, a Dominican group bought out First National Bank, then in 2005, amid a crisis at the bank, the Vicini family took majority control. As of the end of 2014, it operated about 250,000 savings accounts at 57 branches.

Latin American banks trade at a median price-to-book ratio of 1.5 times, suggesting Banco Dominicano del Progreso could fetch about $166.4 million, without a possible deal premium.

Scotiabank, under Chief Executive Officer Brian Porter, has been focusing on Latin America for international growth, with an emphasis on Mexico, Colombia, Chile and Peru and “opportunistic” takeovers where the lender has operations. Porter has said the Dominican Republic, where the Canadian bank holds less than 10 percent market share, offers the greatest opportunity for growth in the Caribbean.

In July, Scotiabank agreed to buy Citigroup Inc.’s banking operations in Panama and Costa Rica.

Scotiabank has operated since 1920 in the Dominican Republic, where the lender has more than 90 branches and 2,000 employees, according to its website. The bank offers a range of services in the island nation, including personal, private, commercial and investment banking.

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