Cencosud, a retail company in Chile, has received regulatory approval to partner with Bank of Nova Scotia (Scotiabank) in jointly developing its credit card business.
The deal, which now has approvals from all relevant regulators in Chile and Canada, is scheduled to complete in early May 2015.
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Under the JV, Cencosud’s 2.5 million cardholders in Chile can access Scotiabank’s products in financial services besides receiving Cencosud client benefits at its stores and shopping centers.
As part of the agreement, Scotiabank will buy a 51% stake in Cencosud’s financial services arm, Cencosud Administradora de Tarjetas, in a transaction valued at $280m and finance 100% of the credit card portfolio.
The two sides have also entered into a 15-year partnership arrangement to manage the credit card business and provide additional products and services to customers.
Cencosud said that the proceeds will be used to reduce 100% of Banco Paris’ debt and the remainder at a Cencosud level.
The company had a credit card loan portfolio of approximately CLP426,562m in Chile, with an average loan of approximately CLP314,403 as of 31 December 2014.
