TORONTO, Dec. 3, 2019 /CNW/ - Scotiabank announced today the closing of the previously announced transaction (the "Transaction") to reduce its 49% interest in Thanachart Bank Public Company Limited ("TBank") in Thailand. As part of agreements entered into with ING Groep N.V., TBank and TMB Bank Public Company Limited ("TMB") in August 2019, Scotiabank is selling its 49% interest in TBank in exchange for cash and an approximately 6% ownership interest in the form of common shares in TMB. Under the agreements, TBank will become a wholly-owned subsidiary of TMB and the two banks will subsequently be merged.
The Transaction supports Scotiabank's strategic decision to focus on its core markets in the Americas where it can achieve greater scale, lower operating risk, and realize more opportunities for growth.
The Transaction is estimated to result in a reduction to Scotiabank's fiscal 2020 earnings compared to fiscal 2019 of approximately $350 million. The Bank will record a gain on the Transaction in the "Other" segment of approximately $410 million after-tax. The Transaction will also result in an increase to Scotiabank's common equity Tier 1 ("CET1") ratio of approximately 35 basis points this quarter.
Subsequent to the Transaction, Scotiabank will retain a 49% interest in two TBank subsidiaries. It is expected a sale process for these subsidiaries will commence in early 2020 with a closing expected during 2020. The future sale of the Bank's retained interest in the two TBank subsidiaries is expected to result in cash proceeds, a gain on sale, and an additional increase in Scotiabank's CET1 ratio.
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