(Toronto) Scotiabank has signed an agreement to buy a minority stake in U.S. bank KeyCorp.
The Canadian bank will pay a total of approximately US$2.8 billion for a 14.9% stake in the company in two stages.
Under the agreement, Scotiabank will acquire its interest through the issuance of a total of 163 million common shares of KeyCorp in two tranches at a price of US$17.17 per share.
The banks say Scotiabank will make an initial investment of US$800 million for a 4.9% stake that is expected to close in the fourth quarter, subject to regulatory clearances and approvals.
The agreement will be followed by an additional investment of US$2 billion for a 10% stake which is expected to be finalized during the 2025 financial year.
KeyCorp operates in 15 states and has approximately 1,000 branches offering retail and commercial banking and investment services and advice.
“We believe this transaction will deliver attractive near-term returns for our shareholders and will open up new opportunities for Scotiabank in the North American corridor, given its unique position as the only Canadian bank with a presence in Canada, the United States and Mexico,” said Scott Thomson, President and CEO of Scotiabank, in a statement.