Advertisement
As part of its “refreshed” company strategy, Canadian bank makes a USD$2.8-billion deal for a minority stake in U.S. regional bank KeyCorp.
Scotiabank has signed a deal to buy a minority stake in U.S. bank KeyCorp as it works to focus on the North American market.
The Canadian bank said Monday it will pay a total of about USD$2.8 billion for a 14.9% stake in the company in two stages.
The deal significantly increases Scotia’s spending on its priority markets, said chief executive Scott Thomson in a statement.
“We believe that this transaction provides attractive near-term returns to our shareholders and creates future optionality for Scotiabank in the North American corridor.”
The bank announced a “refreshed” company strategy last December that included pulling back new spending on some Latin American countries as it focused resources closer to home.
The deal with KeyCorp gives it a greater foothold in the U.S., where other Canadian banks have also been expanding their presence.
Under the agreement, Scotiabank will acquire its stake through the issuance of a total of 163 million KeyCorp common shares in two tranches at a price of USD$17.17 per share.
National Bank analyst Gabriel Dechaine said the surprise deal is expected to add value and increase its North American exposure. But he thinks investors were expecting Scotiabank to pull back from acquisitions, and that any plans for the bank to increase its stake in KeyCorp could sap capacity to spend capital elsewhere, like buybacks.
The banks say Scotiabank will make an initial investment of USD$800 million for a 4.9% stake that is expected to close in its fourth quarter, subject to clearances and regulatory approvals.
The deal will be followed by an additional investment of USD$2 billion for a 10% stake that is expected to close in fiscal 2025.
KeyCorp operates in 15 states, with about 1,000 branches offering commercial and retail banking and investment advice and services.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
This advisor isn’t losing any sleep over the markets. In fact, looking back at 2024 and forward into 2025,...
Car loan interest rates can be as confusing as a complicated recipe, and just as daunting to navigate. This...
Buying your first car in Canada is like any other major purchase. Ask a lot of questions, not just...
Bitcoin’s value surpassed the USD$100,000 mark in late 2024. Here’s what could affect bitcoin and other cryptocurrencies in the...
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
A tax-free savings account (TFSA) is a fantastic way to earn money on your savings, without having to pay...
The Canadian government is sending out the last carbon rebate of 2024. See who’s eligible and how much you...
A fresh international challenger has the potential to add competition to the country’s banking oligopoly, though experts warn it...
Those at or near retirement need to account for slightly higher tax brackets, as well as higher Basic Personal...
Sponsored By
Simplii Financial