Scotiabank Colpatria receives capitalization of $358 billion and anticipates payment of subordinated bonds for another $450 billion.

In the midst of the process that will allow the Canadian bank The Bank of Nova Scotia (Scotiabank Canada) to acquire the entire Scotiabank Colpatria, after the Pacheco family confirmed the sale of its 43.9 percent stake in early 2025, the bank's management announced two transactions that strengthen the bank's financial position.

This involves the advance payment of 450 billion pesos in a subordinated bond issue, which was part of the Bank's additional equity. This operation was carried out in parallel with a capitalization of more than 358 billion pesos through the issuance of new shares, resources that strengthen the bank's subscribed capital, which now amounts to more than 426.675 billion.

“This capitalization demonstrates our shareholders' confidence in Scotiabank Colpatria's long-term vision, while also demonstrating the strength of our financial position, which will allow us to continue supporting the country's economic development and our clients' goals ,” said Jabar Singh, President of Scotiabank Colpatria.

Regarding the debt prepayment operation, the bank's management indicated that this decision replaces subordinated debt—which contributed to its overall solvency—with core capital, thereby improving the quality of its equity structure. " This operation not only strengthens the bank's financial strength, but also reflects the support and commitment of its shareholders to the bank's sustained growth in Colombia."

The prepayment corresponds to all of the subordinated bonds issued by the bank on June 28, 2019, the bank stated, adding that the transaction had been approved by the Financial Superintendency.

The capital increase was formalized through the subscription of more than 10 billion common shares by its shareholders Multiacciones SAS, Mercantil Colpatria SA, Vince Business Colombia SAS, Banderato Colombia SAS, and Acciones y Valores Nuevo Milenio.

As you may recall, on January 6, the Colpatria Group announced the sale of its 43.9 percent stake in Scotiabank Colpatria to its then-current partner in The Bank of Nova Scotia, which is in turn advancing the process of integrating its operations in Colombia, Panama, and Costa Rica with Banco Davivienda.

This merger has already received approval from El Salvador authorities, and approvals from other jurisdictions, such as Panama, Costa Rica, and Honduras, where Davivienda is present, are expected to be announced in the coming weeks, with the aim of moving forward with closing this transaction before the end of 2025.

Although the Colombian Financial Superintendency sees no problem with moving forward with this operation, it is awaiting the opinion of other market authorities to communicate its decision to the market.

The integration of the operations of the two banks will only be in Colombia, Panama and Costa Rica, but the approval of the authorities of El Salvador and Honduras is also necessary, since Davivienda also has operations there, but not Scotiabank.

As a reminder, the agreement approved by the parties will allow Scotiabank to become a shareholder in Davivienda, with an approximate 20 percent stake and representation on its Board of Directors.

With the merger, Davivienda's assets are projected to reach nearly $60 billion, representing a 40 percent increase in its total operations. In Colombia, assets are expected to grow by 30 percent, while in Costa Rica and Panama, the estimated increases are 90 and 180 percent, respectively.