BOGOTA/TORONTO, Jan 6 (Reuters) - Scotiabank will hand

over its operations in Colombia, Costa Rica and Panama to

Colombian bank Davivienda, both parties said on Monday, in

exchange giving Scotiabank a 20% stake in Davivienda.

It marks Scotiabank's latest move to refocus on its core

markets.

Under CEO Scott Thomson, who took charge in early 2023,

Scotiabank has shifted funding to stable, lower-risk countries,

making a bet on the North American trade corridor, while holding

back on spending in its Latin American markets.

That plan focuses on growth closer to home, from Quebec to

the United States and Mexico.

Scotiabank plans to continue servicing corporate, wealth and

global clients in the three countries, it said.

"With this agreement, we advance our execution plan towards

sustainable and higher returns across our International Banking

markets," Scotiabank head of international banking Francisco

Aristeguieta said in a statement.

The Canadian lender's capital ratio, a key measure that

indicates the strength of the bank, is expected to benefit 10

basis points to 15 basis points, due to the reduction in

risk-weighted assets, it said.

Scotiabank is the only lender of Canada's big five banks

that had made a larger bet on South America over the past decade

in a bid to break outside of the saturated market at home.

But it had said in 2023 it could exit the underperforming

Colombian and Central American markets.

As part of the deal, expected to close in around 12 months,

Scotiabank will receive representation on Davivienda's board of

directors.

The Canadian bank will log an impairment loss of around

C$1.4 billion ($976.90 million) in the first quarter on the

deal, it said, with a hit of another C$300 million on closing

due to foreign-exchange effects.

Davivienda's portfolio will jump some 40% in size on the

deal, it said, to around $60 billion. At present, Davivienda and

Scotiabank have 27.4 million clients in the region, Davivienda

added.

($1 = 1.4331 Canadian dollars)