Canada’s third biggest financial service provider Scotiabank has agreed to acquire a majority stake in the credit card and consumer loans unit of Chile’s Cencosud SA for $280 million. Toranto-based bank – which has an extensive operation in 11 LATAM countries including Peru, Colombia, Mexico – says it wants to sharpen its focus on Chile.
In addition to the stake purchase, Scotiabank has sealed a 15-year partnership agreement with the Chilean bank that will allow it to expand its product line in the South American country. Scotiabank’s business in Colombia, Banco Colpatria, has a similar partnership arrangement with Cencosud in that market.
Scotiabank entered Chile in 1990 and has since grown to an operation with close to 3,800 employees, 130 branches and 166 ABMs across the country. Analysts say the deal, if approved, would make Scotiabank the third-largest credit-card provider in Chile.
Cencosud – which owns supermarket chain Jumbo and the Paris department stores – had previously attempted to sell 51 percent stake in credit card business in Chile and Argentina for $307 million to Brazil’s Itau Unibanco Holding SA. But that deal fell through last year.
Cencosud’s financial services business includes approximately 2.5 million credit cards and more than US$1.2 billion in outstanding balances in Chile. Scotiabank said it has agreed to fund 100% of the company’s loan portfolio.
It seems Scotiabank is looking to grow bigger through acquisition. In May, it acquired a 20 percent stake in the banking business of Canadian Tire Corp.
“This transaction will also increase our scale in Chile’s growing consumer lending market and is consistent with our focus on growing in key markets in Latin America, including Chile,” said Wendy Hannam, Scotiabank’s executive vice president for Latin America, in a news release.