July 12 (Reuters) - Bank of Nova Scotia withdrew its application to acquire a nearly 20 percent stake in Bank of Guangzhou on Friday after Chinese authorities decided against proceeding with the C$719 million ($691.28 million) deal.
Scotiabank, Canada’s No. 3 lender, warned in May that Chinese authorities were re-evaluating whether they wanted to go ahead with the deal, originally struck in September 2011.
Bank of Guangzhou is primarily government-owned and is not publicly listed. The city of Guangzhou, with a population of around 13 million, is about 120 km (75 miles) northwest of Hong Kong.
Scotiabank had said recent changes in municipal and federal leadership in China had prompted authorities there to rethink the deal.
The Toronto-based bank said on Friday that the two sides had re-evaluated the proposed partnership in light of “changing conditions.”
Scotiabank had hoped the deal would give it a sizable growth platform in one of China’s largest cities, and complement its already large international operations.
“Scotiabank will continue to consider future opportunities for investment in China that are in line with our strategy and footprint in the region,” Scotiabank’s head of International banking, Dieter Jentsch, said in a statement issued by the bank.
Scotiabank currently has an asset management joint venture with Bank of Beijing. It also owns 19 percent of China’s Bank of Xi‘an. Foreign banks are currently not allowed to own more than 20 percent of a Chinese lender.
Scotiabank, which has large international operations spread through Latin America and Asia, has had a presence in China for more than 30 years, with branches in Guangzhou, Chongqing and Shanghai. It also has branches in Hong Kong and Taipei.