Source: The Canadian Press

Bank of Nova Scotia (TSX:BNS) is making good on plans to capitalize on international opportunities, announcing Monday that it will acquire Royal Bank of Scotland’s corporate and commercial banking operations in Chile.

Financial terms of the deal weren’t disclosed and Scotiabank described them as “not financially material.”

Scotiabank has long been considered Canada’s most international bank, with major operations in Latin America and the Caribbean.

The bank said last month that it would set up a separate wealth management unit to capitalize on international opportunities, especially in the emerging markets of Latin America and Asia.

Rob Pitfield, Scotiabank’s head of international banking, described Chile as one of the “most developed and attractive markets” in Latin America.

The country is one of the world’s major mineral producers and a significant producer of wine and agricultural products. Chile also hosts one of the world’s biggest copper companies, and gold and silver operators.

Canadian companies ranging from Barrick Gold (TSX:ABX) and Teck Resources (TSX:TCK.B) operate in the South American country.

As well Canada and Chile signed a free trade deal in 1997 and hope to boost trade over the coming years.

“This is a unique opportunity to increase Scotiabank’s presence in Chile, one of the most developed and attractive markets in the region,” said Pitfield. “It is consistent with our international strategy of investing in countries where we have existing operations and see great potential for growth.”

The Royal Bank of Scotland’s corporate and commercial banking operations in the country have approximately US$900 million in total assets.

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The announcement follows a deal earlier this month for Scotiabank to acquire a Brazilian wholesale banking subsidiary from Germany’s Commerzbank AG.

Scotiabank has operated in Chile for 20 years and has 155 branches and US$10.4 billion in assets in the country.

Monday’s deal will allow the Canadian bank to expand its lending and financial services to corporate clients and institutional investors — things such as trade finance, investment dealing, underwriting and acquisition financing.

“We are very pleased to be able to enhance Scotia Capital’s global wholesale operations through this transaction,” said Mike Durland, co-CEO of Scotia Capital. “Upon closing we will be able to offer capital markets products to new clients and our unique international footprint and extensive experience in serving corporate and institutional clients . . . .”

In Latin America, Scotiabank has operations in Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Mexico, Panama, Peru, Puerto Rico and Venezuela. The bank has more than 32,000 employees in the region, nearly half of its overall total of 70,000 employees.

However, not all of its forays into Asia and South America have proved profitable.

Scotiabank felt some of the 1997 Asian economic crisis and was forced in 1998 to write off its equity stake in its Indonesia affiliate, PT Bank Arya, and to set aside provisions of US$67 million for nonperforming loans in various emerging markets.

In 2002, a major economic crisis in Argentina eventually led the country to default on its foreign debt and the operations of Banco Scotiabank Quilmes were suspended by the local government because of liquidity problems.

Scotiabank refused to inject more capital into the troubled bank and wound up selling it, taking a C$540 million after-tax writedown on its investment there.