Oriental Bank, a subsidiary of OFG Bancorp, bought Scotiabank’s U.S. Virgin Islands’ branch for a $10 million deposit premium, OFG Bancorp announced last week. The transfer was part of a larger transaction with Oriental Bank buying Scotiabank’s operations in Puerto Rico for $550 million in cash.
Scotiabank’s Puerto Rico and USVI operations will be merged into Oriental Bank and its related businesses. The sale was announced June 26.
According to OFG Bancorp, the deal makes Oriental the second largest bank chain in Puerto Rico in core deposits, branches, automated and interactive teller machines and mortgage servicing.
On closing, OFG reportedly had a loan portfolio totaling $7.2 billion, low-cost deposits of $7.9 billion, and roughly 500,000 customers.
One of the biggest impacts of the deal will be to expand Oriental’s mortgage servicing book five-fold, to around $5 billion, which the company says will give it “critical mass to create a new and meaningful non-interest income profit center.”
“The acquisition provides the combined companies with greater prospects for growth, profitability and employee engagement,” said José Rafael Fernández, president of OFG and Oriental Bank.
Ganesh Kumar, OFG’s chief operating officer, will lead the integration team. According to OFG, in recent years, Scotiabank has improved the credit quality of its portfolios in Puerto Rico and USVI.