Canada’s biggest bank Thursday agreed to the purchase of Dresdner Bank Brasil SA from its parent, Commerzbank AG. Bank of Nova Scotia, the Canadian bank, will acquire the wholesale banking unit of Commerzbank AG, Dresdner Bank for an unknown amount. The investment is an effort targeted at enabling Nova Scotia gain from an increase in investments in Brazil’s oil, natural gas and mining industries.

The Toronto based Scotiabank will purchase Dresdner Bank Brasil form Commerzbank as Commerzbank moves towards selling its non-core assets. Commerzbank is Germany’s second biggest lender and has initiated measures to dispose its non-core overseas businesses. With the investment, Scotiabank hopes to be able to foment its presence in Latin America, where it currently employs 32,000 individuals, with operations in eleven states.

The move was partly motivated by Brazil’s impressive comeback from the biting effects of the global financial meltdown. The Brazilian economy has improved faster than some developed economies, courtesy of major government spending on housing and infrastructure programs, coupled with a boom in consumer lending. Other than these, the Brazilian economy was also helped by an increase in commodity prices, being a major exporter of iron ore and grains.

Mike Durland, Scotia Capital chief executive said the firm has been aggressively expanding its wholesale business in crucial Latin American markets that have showcased considerable potential for growth. The Brazilian venture presents an opportunity like no other for the region, said Durland. From its statement regarding the Brazilian venture, Scotiabank reiterated its focus will be on expansion in the country’s vibrant market in natural resources like energy, oil, gas and mining.

Under its own plans, the Brazil division will be answerable to Scotia Capital, Scotiabank’s wholesale and investment banking arm. From 2009 estimates, Dresdner Bank Brasil had about $400 million worth of assets and around 50 employees. Back in March, Commerzbank had said it would sell the Brazilian unit to a consortium of Brazilian investors but the sell did not happen.

Scotiabank will be the only Canadian bank in Brazil with multiple banking licenses to provide a range of financial services when the deal closes, the Toronto-based lender said in a statement today. Scotiabank plans to offer investment-banking services in Brazil for industries including oil and gas, power and mining. The multiple licenses allow it to lend money and offer capital markets and corporate banking-related businesses to local clients.

17 Sep 2010.