Bank of Nova Scotia (BNS) said Monday that it agreed to transfer its banking operation in Colombia, Costa Rica and Panama to Davivienda for about 20% stake in the newly combined entity.

Mercantil Colpatria will sell its stake in Scotiabank Colpatria in Colombia as part of the transaction, according to Scotiabank.

The bank said it expects to close the transaction in about 12 months from signing.

Under the agreement, Scotiabank can appoint directors to the board of Davivienda's combined operations in proportion to its stake.

Bank of Nova Scotia shares were up more than 1% in recent trading.

Price: 54.10, Change: +0.70, Percent Change: +1.32