Medical doctor wearing blue uniform holding happy funny smiling piggybank

Toronto-based Bank of Nova Scotia announced on Thursday that it has reached an agreement with the Ottawa-based Canadian Medical Association (CMA) to acquire MD Financial Management (MD) for $2.6 billion payable in cash at the closing of the acquisition, which is expected in the fiscal fourth quarter of 2018, subject to regulatory approvals and closing conditions.

MD, which provides financial services to physicians and their families, has more than $49 billion in assets under management and administration. MD will operate as a distinct, stand-alone brand within Scotia Wealth Management, with its existing people and management team in place.

“MD Financial Management has served the distinct financial needs of Canada’s physician community for decades and has delivered strong results,” says Brian Porter, Scotiabank’s president and CEO, in a statement. “Through this transaction, MD Financial Management’s clients will benefit from a greatly expanded range of financial solutions, including access to expertise across our wealth- and asset-management businesses.”

“With its existing capabilities in investment management and digital banking, its track record of philanthropy, and its team-based approach to wealth management that addresses the entirety of a client’s life, Scotiabank is the best possible partner to help continue MD’s proud history of meeting the specific needs of Canada’s physicians and their families,” adds Brian Peters, MD Financial Management’s president and CEO, in a statement.

Upon the acquisition’s closing, Scotiabank and the CMA will enter into a 10-year collaboration in which CMA will promote Scotiabank exclusively as the preferred provider of financial products and services to physicians and their families in Canada. In addition, both parties will support philanthropic initiatives and other programs jointly for physicians and the communities they serve.

“Under the terms of this agreement, Scotiabank will invest $115 million over the next 10 years to support the advancement of the medical profession and health care in Canada,” says James O’Sullivan, group head, Canadian banking, with Scotiabank, in a statement.

A public offering of 19.7 million Scotiabank common shares at $76.15 a share on a bought deal basis for gross proceeds of $1.5 billion will fund a portion of the purchase price for the acquisition. Scotiabank’s Common Equity Tier 1 capital ratio will be impacted by approximately 30 basis points as a result.