The pattern of Canadian banks stripping back their global operations continues, with Scotiabank, formally known as the Bank of Nova Scotia (TSE:BNS, Mkt cap 78.10B, P/E 11.34, Div/yield 0.68/4.21, EPS 5.69, Shares 1.21B) announcing it has sold its loan and deposit portfolio in Egypt to the Arab African International Bank (AAIB).
As the Financial Post reports, Scotia has been in Egypt since 1976, with a branch in Cairo, but decelerating domestic growth, coupled with intense global regulation, are said to have played a part in the scaling back of its international business.
Scotia is not the only Canadian bank to re-assess the costs and benefits of operating abroad. In November last year, Royal Bank of Canada said a “strategic review” prompted the decision to exit the bank’s international client wealth-management business in the Caribbean.
The restructuring was part of a plan to pursue “sustainable, controlled growth and profitable scale” in its most profitable markets, officials at RBC, Canada’s largest bank by market capitalization, said at the time.
Marcelo Gomez-Wiuckstern, director of Scotia’s international banking communications, cited similar reasons behind its move away from Egypt, stressing that the decision is “purely strategic” as the bank manoeuvres its resources in the direction of its “focus priorities”.
“Our focus in this transition was to find a partner who shares our values and commitment to providing great service to our customers,” he said.
As part of the agreement, AAIB will become Scotia’s “preferred correspondent bank” in Egypt, providing banking services to customers of Canada’s third-largest bank who do business in the country, explained Gomez-Wiuckstern.
Alongside acquiring Scotia’s portfolio of deposits and loans in Egypt, AAIB procures a trade finance portfolio.
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