KeyCorp and the Bank of Nova Scotia (Scotiabank) received approval from federal regulators to complete a $2 billion strategic minority investment through which Scotiabank will increase its share holdings in KeyCorp to nearly 15 percent.
Scotiabank previously picked up a 4.9 percent noncontrolling stake in KeyCorp, valued at approximately $800 million, when the deal was announced in August. The second part of the transaction is expected to close the first quarter of 2025, allowing the Canada-based institution to increase its KeyCorp holdings to 14.9 percent, worth approximately $2.8 billion.
KeyCorp is the banking holding company for KeyBank and is the 26th largest insured depository institution in the U.S. with approximately $189.8 billion in total assets, including $145.7 billion in consolidated deposits. Scotiabank is the third largest insured depository institution in Canada, with more than $1 trillion in total assets.
The Federal Reserve unanimously approved the purchase through which Scotiabank does not propose to control or exercise a controlling influence over KeyCorp as defined by the Banking Holding Act (BHC).
“Under the BHC Act, a company controls a bank or another company if (1) the company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the bank or company; (2) the company controls in any manner the election of a majority of the directors or trustees of the bank or company; or (3) the board determines that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company,” the Fed explained in an order approving the purchase.
The move will be beneficial as Scotiabank looks to expand its presence in North America. KeyCorp controls KeyBank, which operates in Alaska, Colorado, Connecticut, Florida, Idaho, Indiana, Maine, Massachusetts, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and Washington.
As for KeyCorp, the bank indicated it intends to explore opportunities to expand its investment banking operations by leveraging Scotiabank’s presence in Canada, Mexico and Central America.