23 October 2006

Scotiabank Bids to Acquire Control of Dehring Bunting & Golding

BMO Capital Markets, 23 October 2006

In a widely anticipated deal, Scotiabank and its 70%-owned Jamaican subsidiary, Scotiabank Jamaica, will acquire a controlling stake in Dehring, Bunting and Goldring (DB&G) for $85-90 million. This is a small deal, and we are leaving our forecasts unchanged. It is noteworthy that this acquisition is somewhat different from Scotia’s historical focus on personal and commercial (P&C) banking in the Caribbean. First of all, DB&G is a securities dealer and merchant bank; i.e., not a classic branch based deposit taker. Second, the deal is quite dependent on retaining and motivating the principals of DB&G. We believe that given Scotia's high market share in the region (and the evolving needs of the consumer), further deals will continue to stray from the typical P&C banking model. We would not be surprised to see a material insurance transaction in the coming year. Scotiabank management has an excellent track record in the Caribbean. As such, we believe that they will continue to be successful as they grow into a broader range of financial services products.