Bank of Nova Scotia (BNS) acquired a Puerto Rican bank Friday in a U.S. Federal Deposit Insurance Corp.-assisted transaction, expanding its already-dominant presence in the Caribbean.

Scotiabank, which has conducted business in Puerto Rico for a century, bought R&G Financial Corp.'s (RGFC) troubled R-G Premier Bank of Puerto Rico, gaining $5.6 billion in assets, including $5.3 million in loans, 80% of which are covered under a FDIC loss-sharing agreement. The Toronto-based bank adds 29 branches to the 17 it already has in the struggling U.S. territory, boosting its market share to about 9%. Scotiabank first opened a branch there in 1910.

R-G Premier, which has $2.2 billion in deposits, is one of three banks that regulators closed Friday, as they seek to repair the island's banking system and shore up its ailing economy.

Scotiabank is the third Canadian bank to make a FDIC-assisted transaction in April. Bank of Montreal, the country's fifth-largest lender, bought the assets of Rockford, Ill.-based Amcore Bank April 23 to expand its footprint in the U.S. Midwest. Toronto-Dominion Bank, the second biggest, agreed to buy three failed Florida-based financial institutions on April 16, as part of its U.S. growth strategy.

Unlike its domestic rivals, Scotiabank does not intend to enter the U.S. retail-banking business. Chief Executive Rick Waugh is continuing his predecessors' international growth strategy.

The bank said in a statement that the transaction is not material to current earnings or capital, but will result in an "immediate positive" earnings contribution. The FDIC is providing additional funding to balance the acquired assets, it said.

As reported, Scotiabank had C$507.63 billion in total assets and C$364.94 billion in deposits as of Jan. 31.

The transaction is effective immediately.

Company Web site: http://www.scotiabank.com

-By Caroline Van Hasselt; Dow Jones Newswires; 416-306-2023; caroline.vanhasselt@dowjones.com
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