Fitch Ratings has withdrawn its ratings on El Salvador’s Banco de Comercio, following the integration of BanCo into Scotiabank El Salvador.

On Oct. 22, 2004, Bank of Nova Scotia and BanCo announced the signing of a memorandum of understanding that led to the merger of BanCo into Scotiabank El Salvador on May 2. In December 2004, BNS had acquired 98% of BanCo’s shares in the local stock exchange through a public tender offer.

Due to local regulations that prohibit a single shareholder from owning two banks, the final settlement of the transaction (about $180 million) was postponed until the merger of BanCo into Scotiabank El Salvador took place. This merger created the fourth largest bank in the country while reducing the significant gap in terms of size with the three dominant banks in the market, Fitch notes.

“The conclusion of this transaction represents a substantial increase in BNS’ commitment to El Salvador,” notes Fitch. “BNS has had a presence in El Salvador, through Scotiabank El Salvador, since 1997, offering a range of services to corporates and individuals, although its main focus is the consumer and mortgage market.”

Established in 1949, BanCo was the fourth-largest bank in the Salvadorian financial system, with an 11% asset market share at the end of 2004. BanCo traditionally served the corporate market, although in recent years, it had expanded into consumer and mortgage lending, Fitch says. The bank managed some subsidiaries involved in securities brokerage, credit card administration, factoring and leasing, and remittances.