Summary by Moomoo AI
Scotiabank has entered into an agreement to transfer its banking operations in Colombia, Costa Rica, and Panama to Davivienda in exchange for an approximate 20% ownership stake in the combined entity. The transaction, expected to close in 12 months subject to regulatory approvals, aligns with Scotiabank's five-year plan to improve profitability across International Banking markets.The deal will result in an after-tax impairment loss of CAD$1.4 billion in Q1 2025, reducing Scotiabank's CET1 ratio by 10-15 basis points. An additional loss of approximately CAD$0.3 billion is expected at closing, primarily due to cumulative foreign currency translation losses. However, the CET1 ratio is expected to benefit by 10-15 basis points from reduced risk-weighted assets.The strategic partnership includes a mutual referral agreement, allowing Scotiabank to maintain support for Corporate, Wealth, and Global Banking clients across Davivienda's footprint. Scotiabank will gain board representation proportionate to its ownership stake in Davivienda, a financial institution serving over 24.6 million clients across Latin America with strong digital capabilities.
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