• Transfer of Colombia, Costa Rica and Panama businesses to Davivienda will create a bank with greater scale in each market.
• Scotiabank to receive an approximate 20% ownership stake in Davivienda on a pro forma basis.
• With this agreement, Scotiabank continues to execute against its five-year plan to improve profitability across its International Banking markets.
• This transaction is capital neutral overall with potential upside to earnings in future years, while significantly reducing operational complexity.

TORONTO, Jan. 6, 2025 /CNW/ - Scotiabank announced today it has entered into an agreement with Davivienda to transfer Scotiabank's banking operations in Colombia, Costa Rica and Panama to Davivienda. As part of the transaction, Mercantil Colpatria will sell its interest in Scotiabank Colpatria in Colombia.

Transaction Highlights:
Subject to the receipt of regulatory approvals in the relevant jurisdictions, the completion of the transaction is expected to occur in approximately 12 months from signing.

Scotiabank will receive a combination of newly issued common and preferred shares reflecting an approximate 20% equity ownership stake in the newly combined entity. As part of the agreement, Scotiabank will have the right to designate individual(s) to serve on the Board of Directors of Davivienda's combined operations commensurate with its ownership stake.

Scotiabank's operations that are part of this transaction will now be considered held for sale for accounting purposes, and an after-tax impairment loss of approximately CAD$1.4 billion will be recognized in the first quarter of 2025. This is expected to reduce Scotiabank's Common Equity Tier 1 ("CET1") ratio by approximately 10-15 basis points. In addition, there may be changes to the loss up to closing from changes in the value of the shares received and carrying value of the assets being sold.

We estimate that additional losses of approximately CAD$0.3 billion will be recorded on closing primarily relating to cumulative foreign currency translation losses.

At closing, Scotiabank's investment in Davivienda will be recorded as an investment in associate for accounting purposes. The CET1 ratio is expected to benefit an approximate 10-15 basis points, primarily from the reduction in risk-weighted assets.