Scotiabank leaves nine Caribbean countries

Scotiabank leaves nine Caribbean countries

Corporate & Sovereign Strategy Asset Management Bonds Loans M&A People Caribbean Jamaica Trinidad & Tobago

Scotiabank said it is leaving nine markets in the Caribbean and also selling its life insurance businesses in Jamaica and Trinidad and Tobago.

"Exiting these non-core operations is consistent with the strategy that began five years ago to sharpen our focus, increase scale in core geographies and businesses, improve earnings quality and reduce risk to the bank," CEO Brian Porter said in a conference call to discuss the bank's latest financial results. "That said, we expect to remain in our core markets across the Caribbean region."

Republic Bank will spend $123m for Scotiabank's operations in Anguilla, Antigua, Dominica, Grenada, Guyana, Saint Kitts and Nevis, Saint Lucia, Saint Maarten and Saint Vincent and the Grenadines. The purchase price includes $25m for the business in Anguilla and $98m for the other eight countries, Republic Bank said in a statement.

Based in Trinidad, Republic Bank has other operations in Guyana, Barbados, Grenada and Suriname, along with a subsidiary in Ghana.

Barbados' Sagicor is reportedly shelling out $203m for Scotiabank's insurance underwriting business in Jamaica and Trinidad and Tobago, but it has also entered into a 20-year agreement to sell insurance policies through bank in those two markets. "We've always said that we didn't want to be in the underwriting business. We want to be in the distribution business," Porter told analysts.

As Scotiabank holds on to its banking branches in Jamaica and Trinidad, it expects to close its acquisition of Banco Dominicano del Progreso in the Dominican Republic in the first quarter of next year, Porter said. Scotiabank agreed in August to buy Progreso for roughly $330m and become the fourth largest lender in the Dominican Republic.

"The DR has size, it has scale. It has average GDP growth over the last 10 years of 5.5%. It's a dynamic market. We've operated there for over nine years," Porter said. "We're very comfortable operating in the DR and we look forward to growing our business there."

Porter also said Scotiabank will focus on integrating recent acquisitions in Chile, Peru and Colombia in 2019. The bank closed a $2.2bn deal for 68% of BBVA Chile in July and doubled its market share in the country to 14%. It also nabbed 51% of Banco Cencosud in Peru for CAD130m ($98m) in May and bought Citi's consumer and small business operations in Colombia in February.

Scotiabank's businesses in the Pacific Alliance member countries — Mexico, Chile, Colombia and Peru — logged a 28% rise in revenue year-on-year and a 42% jump in loans in the fourth quarter that ended on October 31, thanks to the recent acquisitions, CFO Raj Viswanathan said during the conference call.

Scotiabank expects to record 9% earnings growth from its bank in the Pacific Alliance countries over the next year as the trade bloc's economies grow around 3%, said Nacho Deschamps, the head of international banking.

Elsewhere in Latin America, Porter said Scotiabank has no plans to sell its "very well run" business in Uruguay or its "consistently profitable" wholesale banking operations in Brazil.

"We've got a couple more to go, and you'll hear more from us in 2019," Porter said of upcoming asset sales, "but they don't pertain to Latin America or the Pacific Alliance."