Bank of Nova Scotia yesterday announced a $390 million (US$330 million) investment in Peru as part of its strategic growth plan in Latin America. The full investment also includes US$266 million by Italy’s Banca Intesa for a combined value of almost US$600 million.

“We have been part of the Peruvian market for eight years and we see great potential in this market. We look forward to finalizing the agreement and building on our presence in this country,” said Rick Waugh, Scotiabank president and CEO, in a release. “This agreement demonstrates our commitment to grow the Bank through strategic acquisitions in key markets in Latin America.”

Through this investment, Scotiabank will acquire from Banca Intesa approximately 80% of Banco Wiese Sudameris (BWS). At the same time, Scotiabank announced that, following its acquisition of control of BWS, it will take majority ownership of Banco Sudamericano, of which it is currently a 35% shareholder. If the deal receives final approval, these institutions will then be combined to form the country’s third largest bank. Scotiabank expects to hold an approximate 80% stake in the new bank with Banca Intesa retaining approximately 20%. The transaction is subject to regulatory approvals.

“If this transaction receives all regulatory approvals, we intend the new bank to reach an agreement with the Peruvian government regarding all pending economic issues related to the 1999 restructuring of Banco Wiese,” said Waugh. “This agreement would include a cancellation of the Aval, a guarantee currently valued at about US$250 million established by the Government of Peru in favour of Banco Wiese, freeing up these funds for other important government projects and initiatives on behalf of the people of Peru. We believe this is an important step in resolving an outstanding issue and eliminating uncertainty, enabling us to move forward and grow our operations in Peru, while serving our customers effectively.”

“Given BWS’s relevance to the Peruvian banking system, Banca Intesa was looking for a partner that could further strengthen BWS, and pursue with us the interests of the Peruvian economy in ensuring the stability of its banking system and the interests of customers and employees in preserving BWS as a prominent banking institution,” said Giovanni Boccolini, Head of International Subsidiary Banks, Banca Intesa. “We believe we have found such a partner in Scotiabank.”

This agreement continues a series of recent Latin American investments by Scotiabank, including Mexico, the Dominican Republic, Puerto Rico and El Salvador. Scotiabank currently holds a 35% stake in Peru’s Banco Sudamericano.

“Over the last eight years, we have become very familiar with Scotiabank and welcome their move to take majority ownership of Banco Sudamericano,” said Roberto Calda, chairman, Banco Sudamericano. “Scotiabank has developed an understanding of the Peruvian market that will enable them to continue to serve our customers with excellent products and services.”