Canada’s third largest lender
has struck a $1bn deal for a majority stake in
Colombia’s fifth-largest financial group, Banco Colpatria.

The deal is aimed at giving Scotiabank a large
retail banking presence in Colombia with 175 branches.

Scotiabank will pay $500m in cash and the
remainder in shares for a 51% stake in Banco Colpatria.

Colombian holding firm Mercantil Colpatria,
which owns the other 49% of Banco Colpatria, has the choice to sell
the remainder to Scotiabank in seven years.

“We are pleased to be partnering with
Mercantil Colpatria a well-established and well-regarded Colombian
conglomerate that has successfully led the growth of Banco
Colpatria for more than 40 years,” Scotiabank CEO Rick Waugh said
in a statement.

“The strength of their retail business
complemented by our wholesale operations in the country will enable
Banco Colpatria to service and grow new client segments in the
Colombian market,” Brian Porter, Scotiabank’s group head of
international banking, said in a statement.

Scotiabank entered Colombia last year with the
purchase of Royal Bank of Scotland’s (RBS) wholesale
operations in the country. The assets came up for sale when RBS
began selling off assets to shore up its balance sheet. Scotiabank
is now vending in those assets, which are worth just over $60m,
into this deal.

Through the deal, Scotiabank will have the
right to choose key executives as well as name four of the seven
board members at Banco Colpatira.

“With this alliance, we bring together our
strengths and Scotiabank’s expertise in risk and capital
management, wholesale banking operations and solid network in
Central and South America,” president of Banco Colpatria, Eduardo
Pacheco, said in a statement.

Scotiabank has been expanding its operations
in Latin America for years and has operations in a range of
countries from Mexico, Belize and El Salvador to Panama, Costa
Rica, Peru and Chile.

The deal is subject to regulatory approval and
is expected to close by the end of this year, according to
Scotiabank. Banco Colpatria has assets worth $6.2bn.