KeyCorp (NYSE:KEY) revealed today that it has agreed to a significant minority investment by The Bank of Nova Scotia (NYSE:BNS), valued at approximately $2.8 billion.
This deal will see Scotiabank acquire roughly 14.9% of KeyCorp's common stock at a fixed price of $17.17 per share.
Chris Gorman, Chairman and Chief Executive Officer of KeyCorp, expressed optimism about the deal, noting, "Scotiabank approached us with a unique opportunity to raise capital on attractive terms. Although we are comfortable with our current capital position, this investment will allow us to accelerate our capital and earnings improvement plans while enhancing our strategic position."
The investment is poised to bolster KeyCorp’s capital reserves significantly, with an estimated increase of 195 basis points in its CET1 ratio, bringing it to 12.4% as of June 30, 2024.
Additionally, the investment is expected to increase KeyCorp's tangible book value per share by more than 10%, signifying a robust enhancement to the bank’s financial health and operational capabilities.