Bank of Nova Scotia, Canada's third biggest lender, has reached a deal to sell its operations in Puerto Rico and the US Virgin Islands to Oriental Bank, a subsidiary of OFG Bancorp.
OFG Bancorp is acquiring the Toronto-based bank's Puerto Rico operation for $550m in cash, and Scotiabank's US Virgin Island branch operation for a $10m deposit premium.
The deal is expected to be about 40% accretive to Oriental Bank parent OFG Bancorp's earnings per share in 2020, and the lender will have a loan portfolio totaling $7.2bn and about 500,000 customers.
Scotiabank will record an after-tax loss of about C$400m ($304.79m) in the third quarter of 2019 following the deal, which will help it focus on its key six markets.
Until regulatory approvals are obtained and the transaction closes, all operations, branches and products will continue to operate as usual.
Oriental Bank provides personal and commercial banking services to customers, primarily in Puerto Rico. It was founded in 1964 and is headquartered in San Juan, Puerto Rico. The firm has expanded over the years as a result of organic growth and strategic acquisitions.