Scotiabank wins regulatory approval for second phase of KeyCorp investment

TORONTO — Scotiabank says it has received regulatory approval for the second phase of its investment in U.S. bank KeyCorp.

The big Canadian bank said Friday the approval came from the board of governors of the U.S. Federal Reserve System.

Scotiabank announced in August a plan to acquire a 14.9 per cent stake in KeyCorp for about US$2.8 billion in a two-step process.

KeyCorp chairman and chief executive Chris Gorman said Friday the bank has already seen meaningful results from the first tranche of the investment.

“Completing this transaction will create additional capacity for growth, enabling further investments in targeted scale across our franchise,” Gorman said in a statement.

The deal helps increase Scotiabank’s exposure to the U.S. market, a key and growing area for many of the other big Canadian banks.

“This strategic investment in KeyCorp, a premier bank in the U.S., significantly increases the capital deployed to our identified priority markets,” Scotiabank chief executive Scott Thomson said when the deal was first announced.

KeyCorp operates in 15 states, with about 1,000 branches offering commercial and retail banking and investment advice and services.

Under its agreement, Scotiabank agreed to pay US$17.17 per share for its stake in KeyCorp.

The initial investment for a 4.9 per cent stake was completed on Aug. 30.

Scotiabank said Friday it now expects to close the second phase for an additional 10 per cent stake in 2024.

This report by The Canadian Press was first published Dec. 13, 2024.

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The Canadian Press