Canada’s Bank of Nova Scotia (Scotiabank) has announced that it is exploratory discussions with BBVA to acquire the 100% stake in Banco Bilbao Vizcaya Argentaria Chile (BBVA Chile).

However, Scotiabank has stated no formal agreement has not been reached and there can be no assurance that this process will result in a final agreement. 

Confirming the Chilean media reports on the acquisition, BBVA stated that Scotiabank has requested to review non-public documentation and information from BBVA Chile. As part of the request, Scotiabank also intends to interview managers of the company to analyse the transaction.

BBVA in a statement said: “At this moment it cannot be concluded if the negotiations will lead to an agreement nor the terms of such agreement if it is finally reached.”

Scotiabank has observed that Chile plays an important role in the bank’s Pacific Alliance strategy and its presence in the region can help build scale in higher growth markets of Mexico, Peru, Chile and Colombia.

Currently, BBVA holds 68% of the stake in BBVA Chile, which has a market capitalization of nearly $1.4bn. Of the remaining stake, 29% is owned by the Chilean family Said and the remaining shares are held in free float, Reuters reported.

Record low interest rates continue to weigh on BBVA's performance in Spain and the lender depends on its business in Mexico to boost its revenue. Currently, the bank earns about 40% of its profit from operations in Mexico. 

In February last year, Scotiabank acquired Citigroup's consumer and commercial banking operations in Costa Rica and Panama for $360m.

The acquisition including 21 branches, 88 ABMs and 4 service centers in Panama and Costa Rica will increase Scotiabank's customer base from approximately 137,000 to 387,000.

Image: Scotia Plaza, Scotiabank World Headquarters in Toronto, Ontario, Canada. Photo: Courtesy of  SimonP/Wikipedia.