By Patrick Thomas
Shares of OFG Bancorp. (OFG) are up about 13% at $23.40 after it said Wednesday that its subsidiary, Oriental Bank, would acquire Scotiabank's (BNS, BNS.T) operations in Puerto Rico and the U.S. Virgin Islands.
OFG said it would pay $550 million in cash for the Puerto Rico operations, and a $10 million deposit premium for the U.S. Virgin Island branches.
OFG said the deal would boost 2020 earnings by 40%, and that it would fund the deal with excess capital. Scotiabank's Puerto Rico and U.S. Virgin Island operations had $2.5 billion in net loans, $3.2 billion in deposits, 21 branches and about 1,000 employees as of March 31, OFG said.
"Oriental will be the second-largest bank in Puerto Rico in terms of core deposit, branches mortgage servicing and in terms of ATM network," OFG Chief Executive Jose Rafael Fernandez said on a conference call with analysts Thursday.
Fitch Ratings said Thursday that there could be more consolidation in the coming years in the Puerto Rican banking sector as a number of nondomestic banks have been decreasing their footprints on the island over the last several years.
"The benefits will likely accrue to the second- and third-largest domestic banks, First BanCorp. and OFG Bancorp as they continue to build out their franchises," Fitch said.
Write to Patrick Thomas at firstname.lastname@example.org