Expats Could Face Banking Challenges as Citigroup Looks to Exit Costa Rica

According to recent reports, Bank of Nova Scotia, the third largest lender in Canada according to assets, may be exploring a bid for Citigroup Inc.’s Panamanian and Costa Rican banking units. With a potential value of approximately $1.1 billion, Citigroup’s presence in Costa Rica is significant. In the event that a deal is made, it would be the second such deal between Scotiabank and Citigroup in the last few months.

Late last year, Scotiabank reached an agreement to acquire Citigroup’s commercial and retail banking operations located in Peru. The purchase included eight branch offices and affected approximately 130,000 customers. To date, representatives from both Citigroup and Scotiabank have declined to make any comment on a potential deal.

Based on the fact that Citigroup was involved in talks with Banco Popular Espanol SA, based in Spain, earlier this year regarding a sale of its Central American retail businesses, it appears that the financial institution is looking to exit Costa Rica. Had the sale gone through, it would have included operations in Costa Rica as well as El Salvador, Panama, Nicaragua, and Guatemala. Negotiations came to an end earlier this year because the deal did not mesh well with the Madrid-based financial institution’s business strategy.

Currently, Scotiabank has operations in more than 55 countries in the Caribbean, Latin America, and Asia. Based in Toronto, Scotiabank has recently targeted Peru, Chili, Mexico, and Colombia has nations providing the best growth opportunities. Citigroup, which is based in New York, tends to receive the largest amount of revenue from markets located overseas, but the firm has stated it does plan to scale back its consumer banking markets and even exit some markets by the end of this year.

Regardless of whether the deal with Scotiabank actually goes through, should Citigroup find a successful buyer, the fact remains that thousands of customers in Cosa Rica, many of whom are expats, could potentially be affected.

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