Scotiabank buys Chinese bank stake

Scotiabank is buying nearly 20 per cent of a Chinese bank in a deal worth about $719 million.

The big Canadian bank said early Friday it had been chosen as the winning bidder to acquire 19.99 per cent of the Bank of Guangzhou.

The Chinese bank is not publicly listed and is primarily government owned.

With assets of $24 billion and customer deposits of $16 billion at the end of June 2011, BGZ is the 29th largest bank in mainland China.

The bank operates in a fast growing region of southern China, with an expanding middle class that has benefited from China's growing trade with the world. The Chinese bank has a growing retail customer base and also focuses on providing corporate and treasury services to companies in China.

The investment, which remains subject to regulatory approval, will boost profits in 2012, the bank said in a statement.

Scotiabank, Canada's most international bank, said the transaction is expected to close in December.

"The Bank of Guangzhou is a strong, prosperous and well managed financial institution," Scotiabank president and CEO Rick Waugh said in a statement.

"Asia is a region of strategic importance for Scotiabank and enhancing our investment in China supports our long term growth strategy."

Brian Porter, Scotiabank's head of international banking, said the bank has been doing business in China for 29 years and is the Asian country's largest Canadian bank.

"China has a strong emerging middle class and growing purchasing power and this investment puts Scotiabank in a solid position to expand on our existing platform and help develop the retail banking and wealth management sector."

Scotiabank has more than 70,000 employees, assets of $567 billion and operates around the world. Besides its major presence in Canadian retail banking and wealth management, it is also a key bank in Latin America and the Caribbean and is growing rapidly in Asia.