OFG Bancorp, through its subsidiary Oriental Bank, has agreed to acquire the Puerto Rico and US Virgin Islands operations of Scotiabank for $560m (£441.78m) in an all-cash deal.
The Puerto Rico operation of Scotiabank is being acquired for $550m (£433.9m), while the US Virgin Island (USVI) branch operation of the Canadian banking major is being bought by Oriental Bank for a $10m (£7.89m) deposit premium.
OFG Bancorp said that the acquisitions will consolidate its businesses with enhanced scale while improving the position of Oriental Bank as a premier retail bank in Puerto Rico.
The company expects its subsidiary to become the second largest in Puerto Rico in core deposits, branches, mortgage servicing, and automated and interactive teller machines.
Post-acquisition, OFG Bancorp expects to have nearly 500,000 customers, a well-diversified loan portfolio totalling $7.2bn (£5.68m), and low cost deposits of $7.9bn (£6.23m).
OFG Bancorp and Oriental Bank president, CEO and board vice chairman José Rafael Fernández said: “Scotiabank in Puerto Rico and the US Virgin Islands is known for its strong retail banking franchise in core deposits and loans, principally residential mortgages; its well-developed mortgage servicing and insurance agency operations; and provides Oriental with a presence as the third largest bank in the US Virgin Islands.
“The acquisition is also well timed. Rebuilding activities have given a much needed impetus, turning the Puerto Rico economy positive.”
For Scotiabank, the sale of its operations in the two regions is in line with its decision to focus on important markets across its footprint. During the last four years, the Canadian banking giant has exited or announced its plan to exit 19 countries and redeploy nearly $4bn (£3.16bn) of capital to boost its scale and market share in key markets.
Scotiabank international banking and digital transformation group head Ignacio (Nacho) Deschamps said: “We are pleased to have reached an agreement with Oriental Bank, a prominent local bank with a strong reputation for providing high quality products and services to customers.
“We are confident that Oriental Bank, with the support of a talented team, will be well positioned to continue to grow the businesses and provide continuity to customers and employees in Puerto Rico and the USVI.”
The acquisition is subject to receipt of regulatory approvals and customary closing conditions.