Bloomberg News

Bank of Nova Scotia Falls After Stock Sale: Toronto Mover

February 02, 2012

Feb. 2 (Bloomberg) -- Bank of Nova Scotia fell as much as 2.4 percent after Canada’s third-largest bank agreed to sell 30 million shares for C$1.51 billion ($1.51 billion) to bolster regulatory capital and finance acquisitions.

The Toronto-based bank declined 46 cents, or 0.9 percent, to close at C$51.38 in trading on the Toronto Stock Exchange after falling as low as $50.60, the biggest drop since Dec. 2.

Scotiabank said yesterday after markets closed that the sale of shares for C$50.25 each will help increase capital ahead of new Basel Committee on Banking Supervision standards that take effect in January. At the end of October, Scotiabank had a Tier 1 equity ratio of 12.2 percent, the second-lowest among Canada’s five biggest banks. Tier 1 is the bank’s ratio of capital to risk-weighted assets.

“Completion of the announced equity issue removes a significant overhang” to Scotiabank’s common share valuation, said Brad Smith, an analyst at Stonecap Securities Inc. in Toronto.

Scotiabank, which has operations in more than 50 countries, has spent more than C$3.5 billion in the past five years on acquisitions outside Canada, including China, Thailand and Colombia.

The lender said last month it may sell its Toronto office tower headquarters, which would allow it to raise additional capital.

--With assistance from Doug Alexander in Toronto. Editors: David Scanlan, Jacqueline Thorpe

To contact the reporter on this story: Sean B. Pasternak in Toronto at

To contact the editors responsible for this story: David Scanlan at; David Scheer at

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