Mr. John McCartney reports

SCOTIABANK ENTERS INTO AN AGREEMENT TO TRANSFER BANKING OPERATIONS IN COLOMBIA, COSTA RICA AND PANAMA TO DAVIVIENDA IN EXCHANGE FOR AN APPROXIMATE 20% OWNERSHIP STAKE IN THE COMBINED BANKING OPERATIONS

Bank of Nova Scotia has entered into an agreement with Davivienda to transfer Scotiabank's banking operations in Colombia, Costa Rica and Panama to Davivienda. As part of the transaction, Mercantil Colpatria will sell its interest in Scotiabank Colpatria in Colombia.

The transaction supports Scotiabank's operational efficiency efforts in its non-core markets and strengthens Scotiabank's strategic focus on building a connected value proposition focused on client primacy across its growth markets in the North American corridor and Latin America. The transaction also provides Scotiabank with the opportunity to participate in a business with a proven management team that will be well positioned to become a leading franchise through increased scale, synergies and an expanded client base. Scotiabank and Davivienda intend to enter into a mutual referral agreement that will provide the opportunity for Scotiabank to continue to support corporate, wealth, and global banking and markets clients with its services across Davivienda's footprint.

"With this agreement, we advance our execution plan towards sustainable and higher returns across our international banking markets," said Francisco Aristeguieta, group head, international banking, Scotiabank. "Davivienda is a proven operator, which, through the combined entity, will deliver more scale and become an important partner in supporting our global wealth management and global banking and markets businesses in Colombia and Central America."

Davivienda is a financial institution with over 50 years of experience and is one of the most recognized banks in Latin America for its innovation and digital capabilities with operations in Colombia, Costa Rica, El Salvador, Honduras, Panama and Miami, serving more than 24.6 million clients.

Transaction highlights

Subject to the receipt of regulatory approvals in the relevant jurisdictions, the completion of the transaction is expected to occur in approximately 12 months from signing.

Scotiabank will receive a combination of newly issued common and preferred shares, reflecting an approximately 20-per-cent equity ownership stake in the newly combined entity. As part of the agreement, Scotiabank will have the right to designate individuals to serve on the board of directors of Davivienda's combined operations commensurate with its ownership stake.

Scotiabank's operations that are part of this transaction will now be considered held for sale for accounting purposes and an after-tax impairment loss of approximately $1.4-billion will be recognized in the first quarter of 2025. This is expected to reduce Scotiabank's common equity Tier 1 (CET1) ratio by approximately 10 to 15 basis points. In addition, there may be changes to the loss up to closing from changes in the value of the shares received and carrying value of the assets being sold.

Scotiabank estimates that additional losses of approximately $300-million will be recorded on closing primarily relating to cumulative foreign currency translation losses.

At closing, Scotiabank's investment in Davivienda will be recorded as an investment in associate for accounting purposes. The CET1 ratio is expected to benefit an approximately 10 to 15 basis points, primarily from the reduction in risk-weighted assets.

About Bank of Nova Scotia

Scotiabank's vision is to be its clients' most trusted financial partner and deliver sustainable, profitable growth. Guided by its purpose: for every future, Scotiabank helps its clients, their families and their communities achieve success through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With assets of approximately $1.4-trillion (as at Oct. 31, 2024), Scotiabank is one of the largest banks in North America by assets, and trades on the Toronto Stock Exchange and New York Stock Exchange.

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