PRESS RELEASE: Scotiabank purchasing a minority stake in U.S. regional bank KeyCorp for approximately $2.8 billion.
KeyCorp, a Cleveland-based lender that was significantly impacted during last year’s banking turmoil, will see Scotiabank acquire a 14.9% share by purchasing stocks at $17.17 per share—an 11% premium over the volume-weighted average price of the past 20 trading days, according to a statement released on Monday. On the same day, KeyCorp’s shares rose by 13% to $16.48 in New York, giving the bank a market value of around $15.5 billion.
Scotiabank, based in Toronto and known for its extensive international presence, especially in Latin America, announced last year its intention to reassess some of these investments to refocus on North America and the Caribbean, where it plans to allocate new capital. Despite this shift, Scotiabank continues to have a well-established U.S. capital-markets franchise, which aligns with KeyCorp’s focus on commercial clients.
KeyCorp operates approximately 1,000 branches across the U.S., providing commercial and retail banking, investment advice, and managing about $187 billion in assets.
Scotiabank CEO Scott Thomson noted that the investment significantly boosts capital deployment in priority markets and expressed interest in pursuing future strategic opportunities with KeyCorp.
Chief Financial Officer Raj Viswanathan added during an analyst call that the bank anticipates an additional $300 million to $350 million in earnings from the investment by fiscal year 2026. He also mentioned plans to discontinue the discount on the bank’s dividend reinvestment program, which had been used to generate additional capital.