Bank of Novia Scotia Rumored To Acquire Puerto Rico's FirstBank

Bank of Nova Scotia (BNS) has reportedly made a written offer to acquire Puerto Rico’s third-largest bank, FirstBank, but negotiations are still ongoing, UBS analyst Jason Bilodeau said in a research note, citing a report in Caribbean Business.

Scotiabank’s director of public affairs, Frank Switzer, said the company does not comment on speculation.

The current value of FirstBank’s parent company, First BanCorp (FBP), is roughly US$770-million, Mr. Bilodeau said, adding that Puerto Rico’s “overbanked” market is ripe for consolidation, with stocks trading close to 52-week lows.

“The ability to find ways to deploy capital across its international footprint remains a key strength of the medium-term outlook at BNS,” he said in a research note.

He thinks the additional 138 branches this deal would bring, could be a favorable move within this strategy.

Mr. Bilodeau has maintained his “neutral” rating and $56 price target on BNS shares, which represents upside of roughly 8% from their current trading level.

BNS 1-yr chart