(Recasts; adds quote, details, background)
SANTIAGO, June 20 (Reuters) - Bank of Nova Scotia said on Friday it has agreed to purchase a 51 percent majority stake in Latin American retailer Cencosud's retail credit card business in Chile for $280 million.
The Canadian bank and its local unit, Scotiabank Chile , will also finance all of the retailer's credit card portfolio in Chile for around $1 billion, according to the terms of the agreement, which also call for the business arrangement between the retailer and bank to last 15 years.
The acquisition "will strengthen our credit card offerings for our customers and attract new customers to the bank," Wendy Hannam, Scotiabank's executive vice president for Latin America, said in a statement.
Scotiabank, Canada's third-largest bank, is active in more than 55 countries and has said Chile is one of four Latin American countries it is focusing on for growth. The others are Mexico, Colombia and Peru.
The deal could help Cencosud reduce its debt levels, something the retailer's chief executive said in April the company would focus on in order to keep its investment-grade credit rating.
"This business association is part of Cencosud's long-term strategy, which aims to boost the financial services it offers clients without having to use its own resources," the retailer said in a separate statement.
Regulators in Canada and Chile need to approve the deal, which Cencosud said should be completed by year-end.
A previous deal between Cencosud and Brazil's largest private-sector bank, Itau Unibanco Holding SA, to sell a 51 percent stake in the retailer's credit card business in Chile and Argentina for $307 million fell through last year.
Cencosud - the owner of brands such as supermarket chain Jumbo, home improvement chain Easy, and the Paris department stores, as well as commercial centers - operates in Argentina, Brazil, Chile, Colombia and Peru. (Reporting by Anthony Esposito and Antonio de la Jara, additional reporting by Cameron French in Toronto, writing by Anthony Esposito; editing by Chris Reese and G Crosse)