Scotiabank to Sell Puerto Rico Operations to OFG Bancorp

By Patrick Thomas

Scotiabank (BNS.T) said it's reached a deal to sell its operations in Puerto Rico and its U.S. Virgin Islands branches to Oriental Bank, a subsidiary of OFG Bancorp. (OFG).

OFG said it would pay $550 million in cash for the Puerto Rico operations, and a $10 million deposit premium for the U.S. Virgin Island branches.

Toronto-based Scotiabank, one of Canada's largest banks by assets, said it will record a loss of about $400 million Canadian dollars ($305 million) after-tax in its fiscal third quarter as a result of the deal.

The bank said the majority of this loss represents the carrying value of goodwill relating to Puerto Rico. After foreign currency translation gains and other adjustments, the bank's total loss may be between C$300 million to C$360, the bank said.

OFG said the deal would boost 2020 earnings by 40% and that it would fund the deal with excess capital. Scotiabank's Puerto Rico and U.S. Virgin Island operations had $2.5 billion in net loans, $3.2 billion in deposits, 21 branches and about 1,000 employees as of March 31, OFG said.

Shares of OFG rose about 16% during after-market trading.

Scotia bank has been divesting much of its Caribbean assets since last November when it sold its operations in nine Caribbean countries and its life insurance businesses in Jamaica and Trinidad and Tobago, and of its pension administration and related insurance businesses in the Dominican Republic.

In February, Scotiabank said it would sell its banking and insurance operations in El Salvador to Imperia Intercontinental Inc., the main shareholder of Banco Cuscatlan S.A and Seguros e Inversiones S.A in El Salvador.

When it sold its operations in nine Caribbean countries and its life insurance businesses in Jamaica and Trinidad and Tobago, and of its pension administration and related insurance businesses in the Dominican Republic.

The cumulative impact of those transactions, including the loss on sale of the operations in El Salvador, were expected to result in a net after-tax gain of C$250 million, the bank said in February.

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(END) Dow Jones Newswires

June 26, 2019 17:01 ET (21:01 GMT)

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