The stake is worth approximately C$719 million (around $1.14 billion), said Scotiabank in a statement. BGZ, which is primarily government-owned, has C$24 billion in assets and C$16 billion in customer deposits as of 30 June 2011. It also has a network of 84 branches and offices in China, and last year mooted a public listing in Shanghai within three years. The deal is expected to close in December 2011.

"Asia is a region of strategic importance for Scotiabank. With this investment we can build on our international presence and experiencein China and combine our core strengths in wealth management, personal and commercial operations with our new partners," said Rick Waugh, the president and chief executive of the Canadian firm.

Scotiabank has a large banking presence in mainland China. Since opening its representative branch 1982, it has expanded to include offices in Guangzhou, Chongqing, Shanghai, Hong Kong and Taipei. It also has a 14.8 per cent stake in Bank of Xi'an which will increase to 18.1 per cent pending regulatory approval. 

Elsewhere in Asia, Scotiabank operates in Australia, India, Korea, Japan, Malaysia, Singapore, Thailand and Vietnam.