By Brian Swint
More than a year after several regional banks became unstable amid rising interest rates, the wave of consolidation is continuing.
Bank of Nova Scotia, the Canadian lender, said it would buy a 14.9% stake in KeyCorp for $2.8 billion. KeyCorp, based in Cleveland, Ohio, has about 1,000 branches in 15 states and $187 billion in assets. The agreement follows the Capital One deal to buy Discover Financial for $35.3 billion earlier this year.
For Scotiabank, the deal adds to returns for shareholders and gives them a bigger footprint in North America. For KeyCorp, it's a chance to raise funding on attractive terms, according to a statement from the company.
Mergers can make the financial system more stable if they shore up liquidity. Even though there is much less turmoil in the sector now, the events last year may make banks more cautious about keeping their balance sheets in rude health.
In 2023, Silicon Valley Bank and Signature Bank collapsed in March and First Republic failed in May. Other financial institutions swooped in to pick up the pieces.
Write to Brian Swint at brian.swint@barrons.com
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(END) Dow Jones Newswires
August 12, 2024 09:16 ET (13:16 GMT)
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