Scotiabank Sells Its Operation in El Salvador

Imperia Intercontinental Inc., the main shareholder of Banco Cuscatlán, reached an agreement to purchase the banking and insurance operations of the entity of Canadian origin.

Friday, February 8, 2019

The sale of Scotiabank's operations in El Salvador is subject to authorization by the Superintendence of Competition and the Superintendence of the Financial System.

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From Scotiabank's press release:

TORONTO and SAN SALVADOR, El Salvador, Feb. 8, 2019 /CNW/ - Scotiabank announced today that it has reached an agreement under which Scotiabank will sell its banking and insurance operations in El Salvador, including Scotiabank El Salvador, its subsidiaries and Scotia Seguros, to Imperia Intercontinental Inc. ("Imperia"), subject to regulatory approval and customary closing conditions. Imperia is the main shareholder of Banco Cuscatlán S.A and Seguros e Inversiones S.A ("SISA") in El Salvador.

The decision is driven by the bank's strategy to focus on key markets which can generate greater scale for Scotiabank.

"We are pleased to announce this important agreement; with which we intend to enhance opportunities for the clients of both banks. We are confident this acquisition represents an exciting new development for our institutions, employees and for the country. We have a long-term commitment to invest in El Salvador and our main objective is to continue serving our customers in the best possible way," said Eduardo Montenegro, Chairman of the Board of Directors of Banco Cuscatlán and SISA Insurance.

"This transaction with Imperia is in the best interest of our customers, employees and shareholders. We are confident that Imperia, with the support of a talented team, will be well positioned to continue to grow the businesses and provide a high level of service to customers in El Salvador," said Ignacio (Nacho) Deschamps, Group Head of International Banking and Digital Transformation at Scotiabank.

This transaction is expected to result in an after-tax loss of approximately $170 million that primarily represents the carrying value of goodwill relating to this business and will be recorded in Q2 2019. Upon closing, Scotiabank's common equity Tier 1 (CET1) ratio will increase by approximately 6 basis points.

This follows the announced sales of Scotiabank's operations in nine Caribbean countries and its life insurance businesses in Jamaica and Trinidad and Tobago in November 2018, and of its pension administration and related insurance businesses in the Dominican Republic in December 2018.

The cumulative impact of these transactions, including the loss on sale of the operations in El Salvador, are expected to result in a net after-tax gain of $250 million and increase the Scotiabank's common equity Tier 1 (CET1) ratio by approximately 25 basis points.
Until regulatory approvals are obtained and the transaction closes, all operations, branches and products will continue to operate as usual. Scotiabank and Imperia will work together to ensure a smooth transition for both employees and customers.



More on this topic

Banking Concentration Authorized in El Salvador

January 2020

The Superintendence of Competition authorized the merger request submitted in 2019 by the conglomerates Inversiones Financieras Imperia Cuscatlán and The Bank of Nova Scotia.

In February 2019, Scotiabank reported that it had reached an agreement to sell its banking and insurance operations in El Salvador, including Scotiabank El Salvador, its subsidiaries and Scotia Seguros, to Imperia Intercontinental Inc.

El Salvador: Scotiabank Purchase Approved

July 2019

The Superintendence of Competition notified Imperia Intercontinental Inc., the main shareholder of Banco Cuscatlán, that the request to purchase the banking and insurance operations of the Canadian entity was accepted.

In early February, Scotiabank reported that it had reached an agreement to sell its banking and insurance operations in El Salvador, including Scotiabank El Salvador, its subsidiaries and Scotia Seguros, to Imperia Intercontinental Inc.

Banco Cuscatlan Brand Returns to El Salvador

June 2016

The operations of Citi Tarjetas and Citibank personal banking, now owned by Grupo Terra, will once again operate under the Cuscatlán brand.

Terra Group has confirmed it will once again be using the Cuscatlán brand to provide "... products and specialized financial services for the following segments: Personal Banking, Corporate Banking, Retail Banking, Business Banking and Insurance Banking" according to a statement issued by the company.

El Salvador: Sale of Citi to Terra Group Confirmed

March 2016

The sale of Citibank operations in El Salvador to Honduras' Grupo Terra has been formalized, with the insurer SISA included in the transaction.

From a statement issued by the Stock Exchange of El Salvador:

It was reported that subject to regulatory approvals from the competent Salvadoran authorities, Inversiones Financieras Citibank, S.A.

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