Dominion Bond Rating Service comments favourably on Bank of Nova Scotia’s agreement to acquire the mortgage business of Maple Financial Group Inc. for $233 million.

“The acquisition will double the bank’s market share in the rapidly growing mortgage broker market to the second largest in the segment, and move BNS from the fourth largest standing in Canada’s overall mortgage market to number three,” it says.

“BNS sees major opportunities to lower costs, particularly funding, as most of Maple Trust’s mortgage book has been funded through securitization, and to improve cross-selling opportunities to the mortgage borrowers,” the rating agency adds. While DBRS believes funding costs will be reduced, cross-selling may prove to be more of a challenge, it says.

“The deal, which is not large for BNS, is not expected to have a meaningful impact on the bank’s capital ratios,” it adds. “As most of Maple Trust’s mortgage book is low risk, the deal is not expected to negatively influence BNS’s asset quality.”

The deal, which is subject regulatory approval, is expected to close on March 31.