The U.S. Federal Deposit Insurance Corp. has reported that Scotiabank is taking over a failed bank in Puerto Rico.

The FDIC says that R-G Premier Bank of Puerto Rico was closed on Friday by the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico, which appointed the FDIC as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Scotiabank de Puerto Rico to assume all of the deposits of R-G Premier Bank.

This acquisition will enable Scotiabank to grow “decisively” in the Puerto Rican market, the bank said.

Under the agreement, Scotiabank is acquiring US$5.6 billion in assets, including US$5.3 billion in loans covered under a loss-sharing agreement with the FDIC. Through this agreement, the FDIC guarantees 80% of loan losses.

The acquisition also includes US$2.2 billion in deposits. The FDIC is providing additional funding to balance the acquired assets.

Scotiabank de Puerto Rico paid the FDIC a premium of 1.35% to assume all of the deposits.

The deal will result in an immediate positive contribution to earnings for Scotiabank Group but is not material to current earnings or capital, Scotiabank said.

The 29 branches of R-G Premier Bank of Puerto Rico will reopen as branches of Scotiabank de Puerto Rico, the FDIC said, and its depositors will automatically become depositors of Scotiabank de Puerto Rico. The consolidation will begin immediately, according to Scotiabank.

“As we celebrate 100 years of operating in Puerto Rico, we are very pleased to build on our long history of serving our customers, employees and communities here with this acquisition,” said Rick Waugh, Scotiabank president and CEO.

Waugh said the acquisition will increase the bank’s market share to approximately 9%.

“We look forward to welcoming our new R-G Premier Bank customers and employees as we take a larger role in the country’s banking sector,” said Troy Wright, CEO of Scotiabank de Puerto Rico. “As we bring this bank into the Scotiabank de Puerto Rico family, we begin a new chapter in our long history here and we are excited about the possibilities that today’s announcement brings.”

With files from Megan Harman

IE