Bank of Nova Scotia (Symbol-BNS)

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fin0007
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by fin0007 »

Sale of Building;

I would say the issues are;

Can BNS realize a greater return on capital somewhere else? BNS can
leverage the capital more by lending than in the rental business.

There are opportunities coming as european bank look to unload some of their
non core ventures. Sell off some smaller ventures to have the funds to fund
an opportunity.

Realization of a gain increases shareholder's capital which BNS needs
to meet Basil criteria.

This is a small venture for BNS. Don't micro manage your investments.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by kcowan »

fin0007 wrote:Realization of a gain increases shareholder's capital which BNS needs
to meet Basil criteria.

This is a small venture for BNS. Don't micro manage your investments.
this is the crux. The property has probably been depreciated from its original costs and so a nice capital gain will accrue. This seems to be a no brainer. I wonder why it took them so long?
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Peculiar_Investor »

Just received
email from TD Waterhouse wrote:TD Waterhouse would like to inform you that the following New Issue has just been announced.

The Bank of Nova Scotia

Short Description: Treasury Offering of Common Shares via Bought Deal
Price: $50.25 CDN per share.
Settlement: On or about February 9, 2012.
Additional information: Size of Issue: Approximately $1.5 billion.

Basel III or SCOTIABANK | Scotiabank acquires 51 per cent of Banco Colpatria? According to the prospectus link, the offering is covered under their May 14, 2010 SHORT FORM BASE SHELF PROSPECTUS.
Last edited by Peculiar_Investor on 01 Feb 2012 17:08, edited 1 time in total.
Reason: Added size of issue, and question about why
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Shakespeare »

Um. I thought that selling the building meant they wouldn't need a dilutive offering?

My biggest holding, too. And taxable (the only one left.)
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Descartes »

According to the PR note, they only needed 1/2 billion $ in common shares for the Columbian bank.
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Re: Bank of Nova Scotia (Symbol-BNS)

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Closed already @ TDWH ! :cry:
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Shurville »

par4 wrote:Closed already @ TDWH ! :cry:
Still open this evening at RBC
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by rishitibriwal »

It is showing as open at RBCDI at 11:15 pm. I've actually placed an expression of interest - lets see if it hits.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Jungle »

By offering more shares for sale, does this lower the value of current stock held by shareholders?
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Peculiar_Investor »

Jungle wrote:By offering more shares for sale, does this lower the value of current stock held by shareholders?
Maybe. The first effect showed up yesterday. BNS had closed at $51.84 (Feb 1) before the deal was announced. The offering was at $50.25, so was at a discount of 3.1%. The stock opened on Feb 2 at $50.65. So current shareholders saw the value of their holdings lowered.

Going forward, offering shares from Treasury is dilutive to existing shareholders, as there will be more shares outstanding, and thus per share measures such as EPS will be impacted. The opposite happens when companies buy back shares. Also, dividends will need to be paid on these new shares, which has a negative effect on the Income Statement. BNS Financials - The Globe and Mail shows that as of Oct 31, 2011 there were 1,088.97 Million shares outstanding, so issuing 30 Million shares (plus "The Bank has granted to the underwriters an option to purchase up to an additional 3 million common shares at closing") adds about 3% more shares.

What this means to existing shareholders will be determined over the course of time as analysts, shareholders and Mr. Market adjust their valuation metrics based on the new share count, Basel III capital cushion, etc.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by AltaRed »

Peculiar_Investor wrote:What this means to existing shareholders will be determined over the course of time as analysts, shareholders and Mr. Market adjust their valuation metrics based on the new share count, Basel III capital cushion, etc.
As a current shareholder, I did not like to hear this BUT if it is used to meet the Basel III cushion as well as fund accretive acquisitions, I can grudgingly accept it and believe Mr. Market will like it. No one likes a question mark regarding Basel III requirements.

That said, I generally do not like share offerings because they are often used to get out of a debt problem (a sign of underperforming or overly ambitious management), or to purchase acquisitions that are supposedly accretive but sometimes do not turn out that way (another potential sign of poor or overly ambitious management). We've seen many examples of companies who have taken over companies, or to expand in things outside their core competence, only to have these assets become a burden on the balance sheet, or to sell them, sometimes at a loss, years later. BNS seems to have a niche here though in Latin America (assuming that continent does not blow up again).
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by pmredmonton »

I really don't like the dilution.

However if it was necessary to bring up capital levels after the expansion into Latin America and these new markets hold the promise of higher returns in the future then I guess I am onboard.

The expansion into emerging markets is the main reason that I favored them over the other Canadian banks so I guess this is a consequence of this strategy.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Peculiar_Investor »

Sale is announced, Scotiabank's landmark Toronto tower sells for record $1.27-billion - The Globe and Mail
It is the second major asset sale by the bank in the past year. In January, Scotiabank sold its remaining 50-per-cent stake in Calgary's Scotia Centre, a 42-storey tower, for $140-million.
With an earnings announcement upcoming, I'd expect we'll get more information about the deal and the implications for capital levels when earnings are announced on Tues May 29th.
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Re: Bank of Nova Scotia (Symbol-BNS)

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Peculiar_Investor wrote:Sale is announced, Scotiabank's landmark Toronto tower sells for record $1.27-billion - The Globe and Mail
It is the second major asset sale by the bank in the past year. In January, Scotiabank sold its remaining 50-per-cent stake in Calgary's Scotia Centre, a 42-storey tower, for $140-million.
With an earnings announcement upcoming, I'd expect we'll get more information about the deal and the implications for capital levels when earnings are announced on Tues May 29th.
From what I can tell its yay for BNS shareholders. The recent Brookfield releases refer to the vastly overpriced sales of trophy Canadian properties in the office and commercial market and this is no doubt what they are referring to. However, until Dundee and/or HR release their numbers (I'm assuming they do on a per asset basis as Brookfield does) we won't know how good/bad/meh the deal was. I cannot help but think of how much overbuilding there is in TO at the moment compared to NYC and other select world cities.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Shakespeare »

Today I sold some BNS from my non-registered account and rebought in my LIF to free up some cash. My sale price was $53.51. When I entered it into my spreadsheet I noticed the previous sale was for $51.70 - on 13 Nov 2006.

Whoopie. :roll:
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by fin0007 »

I noted that I made a comment in mid January on the sale of a building in Toronto. Since then BNS has come to the market and sold treasury shares. I believe this increased the float by 3%. Everyone seems to agree there are concerns about Basel 3 capital requirements.

BNS has three ways to increase capital. 1) Realize a gain on sale of assets, 2) they can sell more equity and 3) they can retain more of their earnings. That means pay less dividends or not increase their dividend. BNS is easily my largest holding and my heart soars on a dividend increase.

From the alternatives above, I favor selling more stock rather than refraining from a dividend increase.

The fellows and ladies running BNS have been pretty capable. I trust their good judgement. The European banks are in pretty serious trouble and I suspect there are some tempting bargains to be had. But the deal can only be done with someone who has cash. Taking out a competitor is wonderful. In a year or two, the acquired bank's head office costs are gone and a few competing branches are merged. BMO's purchase of Marshall and Ilsley took a lot of courage, looks to be working for them though.

Think the next quarter's earnings are out the end of August. Crossing my fingers for a couple of dividend increases. With a big gain on the sale of the building, a dividend increase looks more certain.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Peculiar_Investor »

Wow, we apparently don't talk specifically about this company very often. Bring it back to life with news that Scotiabank to Acquire Jarislowsky Fraser.
Company press release wrote:ORONTO, Feb. 12, 2018 /CNW/ - Scotiabank and Jarislowsky Fraser today announced that Scotiabank will acquire Jarislowsky Fraser, one of Canada's leading independent investment firms with more than $40 billion in assets under management on behalf of institutional and high net worth clients. The combination of Jarislowsky Fraser and Scotiabank's asset management business creates the third‐largest Canadian active asset manager with $166 billion in assets under management (as of December 31, 2017). The transaction is expected to close in fiscal Q3 2018, subject to regulatory approvals.

The purchase price payable at closing of approximately $950 million will be satisfied primarily by the issuance of Scotiabank common shares. An earn-out of up to $56 million in additional Scotiabank common shares may be paid based on achieving growth targets.
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Re: Bank of Nova Scotia (Symbol-BNS)

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There goes the excess capital:

https://ca.reuters.com/article/domestic ... L5GD-OCADN

Or some of it. Let's hope there's a few shekels left over after deals and bonuses for the common shareholder.
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Re: Bank of Nova Scotia (Symbol-BNS)

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This could be a good move long term IF Scotia can leave the company alone and primarily just use its footprint and distribution channel to further the expansion of the JF business. I also like:
Scotiabank intends to offset the dilutive impact of the issuance of common shares to satisfy the purchase price by repurchasing a similar amount of common shares under its normal course issuer bid, over the 12 to 18 month period following closing. The completion of any such repurchases would be subject to regulatory approvals, the suitability of prevailing market prices and prudent capital management. Following the completion of these repurchases, Scotiabank expects the transaction to be accretive to earnings in FY 2020.
I've always been one to absolutely hate equity dilution, and by default, like share buybacks when the price is right (share price undervalued).
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Re: Bank of Nova Scotia (Symbol-BNS)

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Scotiabank intends to offset the dilutive impact of the issuance of common shares to satisfy the purchase price by repurchasing a similar amount of common shares under its normal course issuer bid
Yes, I noticed that too. Nice to have the financial muscle to be able to do that.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Peculiar_Investor »

As part of their Q4 earnings release today they also put out another press release related to their Caribbean operations. They indicate the transactions are not financially material but nevertheless an apparent change in strategic direction.

CNW | Scotiabank Announces New Partnership to deliver Enhanced Insurance Services in Jamaica and Trinidad & Tobago and to refocus its Caribbean Operations by Divesting Operations in 9 countries
Scotiabank wrote:Scotiabank today announced agreements with respect to certain of its Caribbean operations, as part of its strategy to focus the Bank's efforts on its core markets with significant scale.

As part of this strategy, Scotiabank's subsidiaries in Jamaica (Scotia Group Jamaica Limited, "Scotiabank Jamaica") and Trinidad & Tobago (Scotiabank Trinidad & Tobago Limited, "Scotiabank Trinidad & Tobago") announced that they will enter into a 20-year distribution agreement with Sagicor Financial Corporation Limited ("Sagicor") through which an enhanced suite of market-leading insurance products and solutions, underwritten by Sagicor, will be offered to Scotiabank customers in Jamaica and Trinidad & Tobago. As part of this partnership, Scotiabank Jamaica and Scotiabank Trinidad & Tobago have entered into agreements to sell their respective insurance subsidiaries: Scotia Jamaica Life Insurance Company and ScotiaLife Trinidad and Tobago Limited to Sagicor.

These agreements are subject to regulatory approval and customary closing conditions. The transaction is also subject to the closing of the announced transaction whereby Sagicor will be acquired by Alignvest Acquisition II Corporation subject to conditions in and pursuant to a plan of arrangement and the surviving entity will continue the Sagicor brand and be publicly-listed on the Toronto Stock Exchange.Scotiabank has also entered into an agreement to sell its banking operations in 9 non-core markets in the Caribbean (Anguilla, Antigua, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Vincent & the Grenadines) to Republic Financial Holdings Limited ("RFHL"). The agreement is subject to regulatory approvals and customary closing conditions.

These transactions are not financially material to Scotiabank. Scotiabank's common equity tier one capital ratio will increase by approximately 10 basis points on closing. Until such approvals are obtained and conditions are met, and the transactions close, all Scotiabank operations in these countries will continue as usual.
As a BNS shareholder I'm indifferent to these changes.
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Re: Bank of Nova Scotia (Symbol-BNS)

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Peculiar_Investor wrote: 27 Nov 2018 08:17 As part of their Q4 earnings release today they also put out another press release related to their Caribbean operations. They indicate the transactions are not financially material but nevertheless an apparent change in strategic direction.

CNW | Scotiabank Announces New Partnership to deliver Enhanced Insurance Services in Jamaica and Trinidad & Tobago and to refocus its Caribbean Operations by Divesting Operations in 9 countries
Scotiabank wrote:Scotiabank today announced agreements with respect to certain of its Caribbean operations, as part of its strategy to focus the Bank's efforts on its core markets with significant scale.

As part of this strategy, Scotiabank's subsidiaries in Jamaica (Scotia Group Jamaica Limited, "Scotiabank Jamaica") and Trinidad & Tobago (Scotiabank Trinidad & Tobago Limited, "Scotiabank Trinidad & Tobago") announced that they will enter into a 20-year distribution agreement with Sagicor Financial Corporation Limited ("Sagicor") through which an enhanced suite of market-leading insurance products and solutions, underwritten by Sagicor, will be offered to Scotiabank customers in Jamaica and Trinidad & Tobago. As part of this partnership, Scotiabank Jamaica and Scotiabank Trinidad & Tobago have entered into agreements to sell their respective insurance subsidiaries: Scotia Jamaica Life Insurance Company and ScotiaLife Trinidad and Tobago Limited to Sagicor.

These agreements are subject to regulatory approval and customary closing conditions. The transaction is also subject to the closing of the announced transaction whereby Sagicor will be acquired by Alignvest Acquisition II Corporation subject to conditions in and pursuant to a plan of arrangement and the surviving entity will continue the Sagicor brand and be publicly-listed on the Toronto Stock Exchange.Scotiabank has also entered into an agreement to sell its banking operations in 9 non-core markets in the Caribbean (Anguilla, Antigua, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Vincent & the Grenadines) to Republic Financial Holdings Limited ("RFHL"). The agreement is subject to regulatory approvals and customary closing conditions.

These transactions are not financially material to Scotiabank. Scotiabank's common equity tier one capital ratio will increase by approximately 10 basis points on closing. Until such approvals are obtained and conditions are met, and the transactions close, all Scotiabank operations in these countries will continue as usual.
As a BNS shareholder I'm indifferent to these changes.
Agree. They are really, really immaterial. The Caribbean has been a very tough place for the 3 Cdn banks that are there, RY, CM, and BNS(biggest). CM has been trying to sell their ‘s for years.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by Koogie »

Also a long time BNS holder. I realize these changes are financially immaterial but I do like it as a reflection of management diligence and competence. To me it seems they were not swayed at all by sentimentality nor by the "empire building" mentality that is often rampant in these big internationals.

Perhaps I am reading to much into it but either way, kudos.
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Re: Bank of Nova Scotia (Symbol-BNS)

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Koogie wrote: 27 Nov 2018 11:44 Also a long time BNS holder. I realize these changes are financially immaterial but I do like it as a reflection of management diligence and competence. To me it seems they were not swayed at all by sentimentality nor by the "empire building" mentality that is often rampant in these big internationals.

Perhaps I am reading to much into it but either way, kudos.
I would say you are probably reading too much into it. These are microscopic businesses that have been losing money since the recession. Well recognized by all involved. Having said that BNS as well as the other big banks are very well run and always looking for ways to better allocate their capital.
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Re: Bank of Nova Scotia (Symbol-BNS)

Post by kcowan »

A good analysis of the opportunities and risks going into 2019:

BNS Prospects and Risks in 2019

I think I will be buying. It is beaten down.
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