Scotiabank has a reputation of being the most international Canadian bank, and the only one of the Big Five lenders that’s made a serious footprint in South and Central America. However, it’s now looking to collect more passport stamps closer to home.
What happened: Scotiabank is transferring all of its banking operations in Colombia, Costa Rica, and Panama to Colombian bank Davivienda in exchange for a 20% stake in the lender.
- It comes just over a year after CEO Scott Thompson said the bank was shifting expansion focuses to Québec, the U.S., and Mexico, and away from Latin America.
- Investments in the region have been disappointing, with too many clients in places like Colombia using only one banking product. This has weighed on earnings.
Why it matters: For a long time, conventional wisdom held that the best way for Canadian banks to grow was through foreign acquisitions. This assumption is changing, with a 2023 Veritas Investment Research report finding the best-performing Canadian banks were the ones that stayed at home.
Big picture: That said, Canada is still a comparatively small market when measured against the U.S., meaning expansion there will always be alluring. For its part, Scotiabank acquired a 14.9% stake in U.S. regional bank KeyCorp last year for ~US$2.8 billion.—QH