Scotiabank makes investments in Peru to expand presence in Latin America

TORONTO and LIMA, Peru, Dec. 5 /PRNewswire-FirstCall/ - Scotiabank today announced a Cdn$390 million (US$330 million) investment in Peru as part of its strategic growth plan in Latin America. The full investment also includes US$266 million by Italy's Banca Intesa for a combined value of almost US$600 million.

"We have been part of the Peruvian market for eight years and we see great potential in this market. We look forward to finalizing the agreement and building on our presence in this country," said Rick Waugh, Scotiabank President and CEO. "This agreement demonstrates our commitment to grow the Bank through strategic acquisitions in key markets in Latin America."

Through this investment, Scotiabank will acquire from Banca Intesa approximately 80 per cent of Banco Wiese Sudameris (BWS). At the same time, Scotiabank announced that, following its acquisition of control of BWS, it will take majority ownership of Banco Sudamericano, of which it is currently a 35 per cent shareholder. If the deal receives final approval, these institutions will then be combined to form the country's third largest bank. Scotiabank expects to hold an approximate 80 per cent stake in the new bank with Banca Intesa retaining approximately 20 per cent. The transaction is subject to regulatory approvals.

"If this transaction receives all regulatory approvals, we intend the new bank to reach an agreement with the Peruvian government regarding all pending economic issues related to the 1999 restructuring of Banco Wiese," said Mr. Waugh. "This agreement would include a cancellation of the Aval, a guarantee currently valued at about US$250 million established by the Government of Peru in favour of Banco Wiese, freeing up these funds for other important government projects and initiatives on behalf of the people of Peru. We believe this is an important step in resolving an outstanding issue and eliminating uncertainty, enabling us to move forward and grow our operations in Peru, while serving our customers effectively."

"Given BWS's relevance to the Peruvian banking system, Banca Intesa was looking for a partner that could further strengthen BWS, and pursue with us the interests of the Peruvian economy in ensuring the stability of its banking system and the interests of customers and employees in preserving BWS as a prominent banking institution," said Giovanni Boccolini, Head of International Subsidiary Banks, Banca Intesa. "We believe we have found such a partner in Scotiabank."

This agreement continues a series of recent Latin American investments by Scotiabank, including Mexico, the Dominican Republic, Puerto Rico and El Salvador. Scotiabank currently holds a 35 per cent stake in Peru's Banco Sudamericano.

"Over the last eight years, we have become very familiar with Scotiabank and welcome their move to take majority ownership of Banco Sudamericano," said Roberto Calda, Chairman, Banco Sudamericano. "Scotiabank has developed an understanding of the Peruvian market that will enable them to continue to serve our customers with excellent products and services."

Banco Wiese Sudameris also welcomed today's announcement. "We believe that this agreement represents ongoing stability and continuity for our customers and our employees," said Carlos Gonzalez Taboada, General Manager of Banco Wiese Sudameris. "In December 2003, the new management of BWS made a commitment to clients and markets to be one of the better banks in Peru. The 2005 annual results confirm that we have been successful, and we look forward to continuing to serve the present and new generations of customers, with more and better services."

Analyst Conference Call -----------------------

• An analyst conference call will take place on Tuesday, December 6, 2005 at 9:00 a.m. EST.
• Interested parties are invited to access the call live, in listen-only mode:
  • Via telephone, toll-free, at 1-800-814-3911 (please call five to 15 minutes in advance).
  • Via the Internet on the Investor Relations page of www.scotiabank.com

  Conference Call Archive -----------------------

  • A telephone replay of the call will be available until December 25, 2005 by calling 416-640-1917 (identification code 21165908 followed by the number sign).
  • The archived audio webcast will be available on the Investor Relations page of www.scotiabank.com from approximately 11:00 a.m. EST on December 6, 2005 for three months.

  Scotiabank is one of North America's premier financial institutions and Canada's most international bank. In Latin America, Scotiabank operates in Mexico, El Salvador, the Dominican Republic, Puerto Rico, Costa Rica, Panama and Chile. The Bank also has affiliates in Peru and Venezuela and a representative office in Brazil. With more than 50,000 employees, Scotiabank Group and its affiliates serve about 10 million customers in some 50 countries around the world. Scotiabank offers a diverse range of products and services including personal, commercial, corporate and investment banking. With Cdn$314 billion (U.S.$266 billion) in assets (as at October 31, 2005), Scotiabank trades on the Toronto (BNS) and New York (BNS) Stock Exchanges. For more information please visit www.scotiabank.com.

  Backgrounders:

  Scotiabank

  Scotiabank is a Canadian-based international bank with operations in some 50 countries around the world. With more than 50,000 employees, Scotiabank Group and its affiliates serve about 10 million customers. Scotiabank offers a diverse range of products and services including personal, commercial, corporate and investment banking. With Cdn$314 billion (US$266 billion) in assets (as at October 31, 2005), Scotiabank trades on the Toronto (BNS) and New York (BNS) Stock Exchanges. For more information please visit www.scotiabank.com.

  In Latin America, Scotiabank operates in Mexico, El Salvador, the Dominican Republic, Puerto Rico, Costa Rica, Panama and Chile. The Bank also has affiliates in Peru and Venezuela and a representative office in Brazil.

  Recent investments in Latin America:

  • In 2003 Scotiabank announced an agreement to acquire an additional 36 per cent of the shares of Grupo Financiero Scotiabank Inverlat (GF Scotiabank Inverlat). The Bank's current share in Scotiabank Inverlat currently exceeds 97 per cent. Scotiabank Inverlat is the country's sixth largest bank.
  • In 2003, Scotiabank announced that it finalized an agreement that more than doubled the size of its operations in the Dominican Republic. Scotiabank is the oldest bank in this country, having established a presence more than 80 years ago.
  • In 2004, Scotiabank El Salvador announced plans to merge with Banco de Comercio. The resulting merger established Scotiabank El Salvador as the majority shareholder of the country's fourth-largest bank, with a consolidated market share of more than 17 per cent.
  • In 2005, Scotiabank Puerto Rico announced that it had entered into an agreement to acquire the assets and operations of Pan American Financial, one of the largest private mortgage originators in Puerto Rico. Scotiabank Puerto Rico is a leading commercial bank in Puerto Rico, with 18 branches and over 550 employees.

  Banco Sudamericano

  Scotiabank's initial investment in Banco Sudamericano (BSA) was made in 1997 representing a 25 per cent equity participation. Scotiabank's position has subsequently been increased to 34.9 per cent.

  BSA ranks 5th in loans and 7th in deposits, with 4.6 per cent and 2.4 per cent market share, respectively. The bank has approximately 30 branches throughout Lima and a subsidiary in Panama and counts about 1,000 employees.

  As part of this agreement, Scotiabank plans to increase its 35 per cent equity interest in Banco Sudamericano (BSA) to majority ownership.

  Banco Wiese Sudameris

  BWS is Peru's third largest bank by assets (more than US$3 billion), loans and deposits. It is a full service bank catering to more than one million customers through its network of 108 branches, with strong presence in the capital city of Lima and in Callao, and in all of the capital cities in the regions of the country. The bank has 2,700 employees, and is strong in retail lending, including mortgages, credit cards and leasing, and was the first local financial institution to offer internet banking in Peru.

  BWS is the result of a merger between the originally family-owned Banco Wiese Ltd. and Banco de Lima Sudameris (BLS), both entities with long and prestigious histories dating back to 1943.

  Banca Intesa took control of BWS through a merger with Banca Commerciale Italiana (BCI). In 1999, Banco de Lima Sudameris (owned by BCI), purchased 60 per cent of Banco Wiese Ltd.

  SOURCE Scotiabank