Bank of Nova Scotia continued the expansion of its International operations yesterday, as the bank signed a memorandum of understanding (MOU) to acquire Mexico’s third-largest mortgage finance company.

The MOU would see Scotiabank acquire 80% of shares in Hipotecaria Credito y Casa (CyC). The transaction is not material to Scotiabank Group and its terms were not released. The MOU is non-binding and the transaction is subject to definitive documentation and a due diligence review.

“This potential acquisition reflects our unique opportunity to grow in one of our high potential markets. Scotiabank sees great potential for growth in Latin America,” said Rick Waugh, Scotiabank president and Chief Executive Officer (CEO), in a release issued Tuesday evening. “The financial service penetration is low in Mexico and demand is growing much faster than in mature markets such as Canada and the United States.”

Completion of the transaction specified in the MOU is subject to the approvals of the boards of directors at Scotiabank and CyC, as well as regulators in Mexico and Canada. The transaction is scheduled to close early in 2005. Two existing shareholder groups, holding 20% of shares, will share ownership of CyC with Scotiabank.

With total assets of US$1.48 billion and net loans of US1.38billion, CyC has a 15% share of the Mexican Sofol mortgage market. CyC has about 72,000 serviced loans, 800 employees and 113 offices in 31 Mexican states. Sofol stands for Sociedad Financiera de Objeto Limitado. Sofoles are mortgage finance companies active in the builder and retail mortgage markets.

Scotiabank operates in nine Latin American countries and has been in Mexico since 1967. Scotiabank Group now owns 97% of Scotiabank Inverlat.

Grupo Financiero Scotiabank Inverlat employs about 6,730, with 1,000 automated banking machines (ABMs) and more than 400 branches. Inverlat is the sixth largest financial group in Mexico.

The CyC transaction was announced in the same week as the successful close of Scotiabank Group’s offer to purchase all shares in El Salvador’s Banco de Comercio. Scotiabank’s offer for BanCo shares closes on Friday, December 3, and the transaction is expected to be completed before March 31, 2005, subject to regulatory and shareholder approvals.

http://www.newswire.ca/en/releases/archive/November2004/30/c9548.html