Scotiabank (NYSE: BNS) announced today that it has entered into an agreement to acquire an approximate 14.9% pro-forma ownership stake in KeyCorp (NYSE: KEY) through an issuance of common shares at a price of $17.17 per share, representing an 11% premium to the volume weighted average price for the last 20 trading days. The total cash consideration is approximately US$2.8 billion (the "Investment").

KeyCorp is a premier U.S. based financial services company operating across 15 states, with US$187 billion in assets and approximately 1,000 branches offering commercial and retail banking and investment advice and services.

The Investment will be completed in two stages—an initial investment of 4.9% (the "Initial Investment") and an additional investment of approximately 10% (the "Additional Investment"), for a total pro forma ownership of approximately 14.9%. The Investment is expected to be accretive to earnings per share in the first full year following closing of the Additional Investment.

"This strategic investment in KeyCorp, a premier bank in the U.S., significantly increases the capital deployed to our identified priority markets," said Scott Thomson, President and CEO of Scotiabank. "We believe that this transaction provides attractive near-term returns to our shareholders and creates future optionality for Scotiabank in the North American corridor, given our unique position as the only Canadian bank with a presence across Canada, the U.S., and Mexico. We look forward to exploring mutually beneficial strategic opportunities in the future."

Scotiabank is one of the top 10 foreign banking organizations in the U.S., with a well-established Global Banking and Markets ("GBM") business. KeyCorp operates a complementary and attractive U.S. business focused on commercial clients.

Transaction Highlights:

Subject to clearances and regulatory approvals, the Initial Investment of 4.9% is expected to close in the fourth quarter of fiscal 2024, and the Additional Investment of approximately 10% (for a total pro-forma ownership of approximately 14.9%) is expected to close in fiscal 2025.

Upon completion of the Additional Investment, Scotiabank will have the right to designate two individuals to serve on KeyCorp's Board of Directors; one senior officer of Scotiabank and one third party director designated by Scotiabank and reasonably acceptable to KeyCorp.

The Initial Investment will be recorded as an equity investment at fair value, with subsequent mark to market changes through other comprehensive income. On completion of the Additional Investment, the approximately 14.9% ownership will be classified as an investment in associate for accounting purposes.

The CET1 ratio impact at closing of the Initial Investment is estimated to be approximately 10 basis points and is estimated to be a further 40 to 45 basis points at the closing of the Additional Investment.

At this time, and until such time the Bank elects otherwise, the Bank intends to suspend the discount on its Shareholder Dividend and Share Purchase Plan effective for dividends to be declared subsequent to the declaration expected on August 27, 2024. Consequently, this will be the last dividend that will be eligible to participate in the discount.

Conference Call
Scotiabank will host a conference call on August 12, 2024, at 9:00 a.m. ET. The call will end promptly at 9:30 a.m. ET. Interested parties are invited to access the call live:

• Via telephone, in listen-only mode, at 416-641-6104 or 1-800-952-5114 (North America toll-free) using access code 3001700#. Please call shortly before 9:00 a.m. ET.
• On the Investor Relations page at www.scotiabank.com/investorrelations.

A telephone replay will be available between Monday, August 12 to Thursday, September 12, 2024, by calling 905-694-9451 or 1-800-408-3053 (North America toll-free). The access code is 6399605#.

The archived webcast will be available on the Investor Relations page at www.scotiabank.com/investorrelations following the call.

Advisors
Bank of America and Scotiabank are serving as financial advisors, and Cravath, Swaine & Moore LLP is serving as legal counsel to Scotiabank.