Toronto-based Bank of Nova Scotia has reached an agreement with Citigroup Inc. to buy the New York-based banking giant’s retail and commercial banking businesses in Panama and Costa Rica, which will increase the scale of Scotiabank’s business in Central America and complement its existing operations in the two countries, the bank announced on Tuesday.

In recent years, an economic slowdown in the region has weighed on the big Canadian banks — including Scotiabank, Royal Bank of Canada and Canadian Imperial Bank of Commerce — that have operations in Latin America and the Caribbean, leading to restructuring and cuts. However, Scotiabank’s deal with Citigroup appears to indicate the bank’s interest in expanding in the region.

“Lower oil prices and a stronger U.S. economy are benefitting our Caribbean operations,” said Brian Porter, president and CEO of Scotiabank at the bank’s annual general meeting in April. “As a result, we are well on our way to earning through many of these challenges.”

Scotiabank’s market share in credit cards will increase substantially, to 18% in Panama and 15% in Costa Rica, making Scotiabank the second largest credit card provider in both countries, the bank says in a statement. In addition, the deal will almost triple Scotiabank’s customer base in these two countries to approximately 387,000 from 137,000 in total. The expanded access to a greater number of customers will provide Scotiabank with opportunities to leverage regional loyalty programs and strategic alliances, the statement adds.

Citibank’s operations in Costa Rica and Panama include 27 branches. The agreement also includes the assumption of Citigroup employees from the retail and commercial banking businesses in Panama and Costa Rica by Scotiabank Panama and Scotiabank Costa Rica, respectively. Scotiabank’s existing operations in Panama include US$2.7 billion in assets under administration (AUA), 16 branches and 27,000 customers, while its Costa Rica operations include US$2.65 billion in AUA, 35 branches and 110,000 customers.

The acquisition, which is subject to regulatory approval, comes as the bank continues to grow its Latin American operations in Mexico, Colombia, Chile and Peru. In May, Scotiabank reached a deal to acquire Citibank’s retail and commercial banking operations in Peru and finalized a deal to acquire a 51% share of Cencosud’s credit card operations in Chile.

Scotiabank’s common equity Tier 1 capital ratio will be impacted by approximately 15 basis points as a result of this latest acquisition.