Scotiabank says China reevaluating Guangzhou deal

TORONTO Tue May 21, 2013 4:31pm EDT

TORONTO May 21 (Reuters) - Bank of Nova Scotia Chief Executive Rick Waugh said on Tuesday that Chinese authorities are reevaluating whether they want to go ahead with a deal to sell 20 percent of Bank of Guangzhou to the Canadian bank.

Scotiabank, Canada's No. 3 lender, announced the C$719 million ($698.09 million) purchase of the stake in September 2011, predicting the deal would close at the end of that year.

But the process has dragged on, and Waugh said recent changes in municipal and federal leadership in China have prompted authorities there to rethink the deal.

"We've had a political change and so we have new partners. So those partners are reevaluating their position," Waugh told the Bloomberg Canada Economic Summit in Toronto.

"The issue isn't Scotiabank. The issue is do they need a strategic partner?"

He added: "We are seriously trying to move this along."

Bank of Guangzhou is primarily government-owned and is not publicly listed. Guangzhou, with a population of around 13 million, is about 120 km (75 miles) northwest of Hong Kong.

Scotiabank hopes the acquisition will give it a sizable growth platform in one of China's largest cities, and complement its already large international operation spread through Latin America and Asia.

Scotiabank also owns 19 percent of China's Bank of Xi'an. Currently, foreign banks are not allowed to own more than 20 percent of a Chinese lender.

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