Scotiabank Said to Consider Sale of Puerto Rico Banking UnitMatthew Monks and Scott Deveau
Bank of Nova Scotia, Canada’s third-largest lender by assets, is weighing a sale of its Puerto Rican banking unit that is valued at about $600 million, according to people familiar with the matter.
The Toronto-based lender is in the early stages of exploring strategic options for Scotiabank de Puerto Rico that could include selling it to a private-equity firm or other lender in the region, said the people, who asked not to be identified because the matter is private.
Scotiabank has just begun deliberating its future in Puerto Rico and could still decide to keep the unit, they said. The island’s volatile economy could make finding a buyer for the franchise difficult, the people said.
The lender with C$792 billion ($700 billion) in assets is eyeing an exit from Puerto Rico -- among the smallest and most troubled banking markets in the U.S. -- as it invests in better growth opportunities in Latin America. Scotiabank executives also have concerns about upheaval in Puerto Rico’s banking market should the faltering Doral Financial Corp. be merged into another Puerto Rican lender, the people said.
U.S. regulators have told San Juan-based Doral that it must increase capital to levels decreed by a 2012 consent order or it must prepare to break up or sell, the company said on Oct. 1.
100 Year History
Paula Cufre, a spokeswoman for Scotiabank, declined to comment on the bank’s plans for its Puerto Rican subsidiary.
Scotiabank, which has banked in Puerto Rico for more than 100 years, more than doubled its presence there by acquiring the loans and deposits of the failed R-G Premier Bank of Puerto Rico in 2010.
Scotiabank de Puerto Rico had 35 branches and $5.1 billion in assets as of June 30, according to the Federal Deposit Insurance Corp. The unit earned about $11 million in the first six months of 2014, after posting a loss of about $6.7 million in the year-earlier period, according to the FDIC.
Profit in Scotiabank’s international banking unit fell 16 percent, to C$452 million, in the quarter ending July 31, due in part to “continuing softness” in Puerto Rico, Scotiabank reported in August.