Bank of Nova Scotia PLUS: High-Leverage Index Note, Full Downside Risk
Rhea-AI Filing Summary
The Bank of Nova Scotia (BNS) has filed an Issuer Free Writing Prospectus for a new structured note offering, the Performance Leveraged Upside SecuritiesSM (PLUS), linked to the EURO STOXX 50® Index (SX5E). The notes are senior unsecured debt under the bank’s Senior Note Program, Series A. Each PLUS has a stated principal of $1,000, an issue price of $1,000, and requires a minimum purchase of one unit. They are expected to price on 17 July 2025, settle on 22 July 2025, and mature on 4 November 2026 (≈ 16-month tenor), subject to standard market-disruption adjustments.
Payment at maturity is entirely contingent on the index performance:
- Upside: 300% leveraged participation when the final index value exceeds the initial value, capped at a 21.40 % maximum gain (maximum payment = $1,214).
- Downside: full 1-for-1 exposure to negative index moves; investors can lose up to their entire principal.
The filing highlights extensive risk factors, including: lack of principal protection, liquidity constraints, limited secondary market making, potential conflicts of interest from BNS/SCUSA hedging, sensitivity to non-U.S. market movements, and uncertain Canadian & U.S. tax treatment. Investors are directed to review the preliminary pricing supplement and related prospectus documents on the SEC’s EDGAR site (CIK 0000009631) before investing.
Positive
- 300 % leverage on positive EURO STOXX 50 returns offers enhanced upside versus direct index investment, up to a 21.4 % cap.
- Short 16-month tenor provides defined investment horizon and quicker capital turnover compared with typical 3-5-year structured notes.
Negative
- No principal protection; investors can lose 100 % of capital if the index falls 100 %.
- Maximum gain capped at 21.4 %, limiting participation in strong bull markets.
- Unsecured debt status exposes holders to Bank of Nova Scotia credit risk.
- Limited liquidity; notes will not be exchange-listed and dealer market-making is discretionary.
Insights
TL;DR: BNS launches capped-return EURO STOXX 50 note; high leverage but full downside risk, limited impact on bank fundamentals.
The PLUS provide 3× upside exposure, yet gains stop at 21.4 %. With no coupon, investors rely solely on final index level, accepting complete capital risk. Estimated fair value (≈ 94–97 % of face) implies an upfront cost of 3–6 %, typical for retail-targeted structured notes. From a credit perspective, issuance marginally extends BNS’s unsecured debt stack but is immaterial relative to its multi-billion funding base; therefore, I view the news as neutral to the equity and credit thesis. For buyers, the instrument may appeal in moderately bullish but range-bound scenarios; however, the capped upside versus unbounded downside tilts the risk-reward unfavorably if the index underperforms.
TL;DR: Product carries full market and issuer credit risk; liquidity and valuation transparency are limited.
The note embeds significant tail risk: every 1 % decline in SX5E cuts redemption value by 1 %, with no floor. Secondary trading depends on SCUSA discretion, often at steep discounts to theoretical value. The 300 % leverage heightens volatility of mark-to-market pricing, potentially triggering early losses for investors who exit before maturity. Conflicts of interest exist because BNS and affiliates hedge the exposure and act as calculation agent. From a systemic viewpoint, issuance size is small; thus, market impact is negligible, leading to a neutral impact rating.
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ISSUER FREE WRITING PROSPECTUS Filed Pursuant to Rule 433 Registration Statement No. 333-282565 Dated June 25, 2025 |
PLUS Based on the Value of the EURO STOXX 50® Index due on or about November 4, 2026
Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
This document provides a summary of the terms of the Performance Leveraged Upside SecuritiesSM (the “PLUS”). Investors should carefully review the accompanying preliminary pricing supplement for the PLUS, the accompanying product supplement, the underlier supplement, the prospectus supplement and the prospectus, as well as the “Risk Considerations” section below, before making an investment decision.
The PLUS do not guarantee any return of principal at maturity and you could lose up to your entire investment. The PLUS are senior unsecured debt securities issued by The Bank of Nova Scotia (“BNS”), and all payments on the PLUS are subject to the credit risk of BNS. As used in this document, “we,” “us,” or “our” refers to BNS.
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SUMMARY TERMS |
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Issuer: |
The Bank of Nova Scotia |
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Issue: |
Senior Note Program, Series A |
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Underlying index: |
EURO STOXX 50® Index (Bloomberg Ticker: “SX5E”) |
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Stated principal amount: |
$1,000.00 per PLUS |
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Issue price: |
$1,000.00 per PLUS |
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Minimum investment: |
$1,000.00 (1 PLUS) |
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Interest: |
None |
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Pricing date: |
July 17, 2025 |
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Original issue date: |
July 22, 2025 (3 business days after the pricing date; see preliminary pricing supplement). |
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Valuation date: |
October 30, 2026, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Maturity date: |
November 4, 2026, subject to postponement for certain market disruption events and as described in the accompanying product supplement. |
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Payment at maturity per PLUS: |
￭ If the final index value is greater than the initial index value: $1,000.00 + leveraged upside payment In no event will the payment at maturity exceed the maximum payment at maturity. ￭ If the final index value is less than or equal to the initial index value: $1,000.00 + ($1,000.00 × underlying return) Accordingly, if the final index value is less than the initial index value, you will lose 1% for every 1% that the final index value falls below the initial index value and you could lose up to your entire investment in the PLUS. |
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Underlying return: |
(final index value – initial index value) / initial index value |
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Leverage factor: |
300% |
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Leveraged upside payment: |
$1,000.00 × leverage factor × underlying return |
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Maximum gain: |
21.40% |
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Maximum payment at maturity: |
$1,214.00 per PLUS (121.40% of the stated principal amount) |
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Initial index value: |
The index closing value of the underlying index on the pricing date |
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Final index value: |
The index closing value of the underlying index on the valuation date |
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CUSIP/ISIN: |
06418VZE7 / US06418VZE72 |
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Listing: |
The PLUS will not be listed or displayed on any securities exchange or any electronic communications network. |
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Commission: |
$22.50 per stated principal amount. |
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Estimated value on the pricing date: |
Expected to be between $941.00 and $971.00 per PLUS. See “Risk Factors” in the preliminary pricing supplement. |
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Preliminary pricing supplement: |
http://www.sec.gov/Archives/edgar/data/9631/000183988225034567/bns_424b2-18789.htm |
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HYPOTHETICAL PAYOUT |
The below figures are based on a hypothetical leverage factor of 300% and hypothetical maximum gain of 21.40% and are purely hypothetical (the actual terms of your PLUS will be determined on the pricing date and will be specified in the final pricing supplement).
Hypothetical Payment at Maturity
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Underlying Return |
Payment at Maturity |
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+50.0000% |
$1,214.00 |
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+30.0000% |
$1,214.00 |
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+25.0000% |
$1,214.00 |
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+20.0000% |
$1,214.00 |
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+10.0000% |
$1,214.00 |
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+7.1333% |
$1,214.00 |
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+7.0000% |
$1,210.00 |
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+5.0000% |
$1,150.00 |
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+3.0000% |
$1,090.00 |
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0.0000% |
$1,000.00 |
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-10.0000% |
$900.00 |
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-20.0000% |
$800.00 |
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-30.0000% |
$700.00 |
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-40.0000% |
$600.00 |
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-50.0000% |
$500.00 |
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-60.0000% |
$400.00 |
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-70.0000% |
$300.00 |
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-80.00000% |
$200.00 |
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-90.0000% |
$100.00 |
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-100.0000% |
$0.00 |
A-1
You will find a link to the accompanying preliminary pricing supplement for the PLUS above and links to the accompanying product supplement, underlier supplement, prospectus supplement and prospectus for the PLUS under “Additional Information About BNS and the PLUS” in the preliminary pricing supplement, which you should read and understand prior to investing in the PLUS.
The issuer has filed a registration statement (including a prospectus as supplemented by a prospectus supplement, underlier supplement, product supplement and the preliminary pricing supplement) with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. Before you invest, you should read the accompanying prospectus in that registration statement and the other documents the issuer has filed with the SEC, including the accompanying preliminary pricing supplement and the accompanying prospectus supplement, underlier supplement and product supplement, for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling (212) 225-5678. Our Central Index Key, or CIK, on the SEC web site is 0000009631.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the preliminary pricing supplement. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to Return Characteristics
▪The PLUS do not provide any protection against loss; you may lose up to your entire investment.
▪The stated payout from the issuer applies only at maturity.
▪Your potential return on the PLUS is limited to the maximum gain.
▪You will not receive any interest payments.
▪The amount payable on the PLUS is not linked to the value of the underlying index at any time other than the valuation date.
▪Owning the PLUS is not the same as owning the index constituent stocks.
Risks Relating to Characteristics of the Underlying Index
▪An investment in the PLUS involves market risk associated with the underlying index.
▪There can be no assurance that the investment view implicit in the PLUS will be successful.
▪The underlying index reflects price return, not total return.
▪The PLUS will not be adjusted for changes in exchange rates related to the U.S. dollar.
▪The PLUS are subject to non-U.S. securities market risk.
▪Changes affecting the underlying index could have an adverse effect on the market value of, and any amount payable on, the PLUS.
▪There is no affiliation between the index sponsor and BNS, and BNS is not responsible for any disclosure by such index sponsor.
▪Governmental regulatory actions, such as sanctions, could adversely affect your investment in the PLUS.
Risks Relating to Estimated Value and Liquidity
▪BNS’ initial estimated value of the PLUS at the time of pricing (when the terms of your PLUS are set on the pricing date) will be lower than the issue price of the PLUS.
▪Neither BNS’ nor SCUSA’s estimated value of the PLUS at any time is determined by reference to credit spreads or the borrowing rate BNS would pay for its conventional fixed-rate debt securities.
▪BNS’ initial estimated value of the PLUS does not represent future values of the PLUS and may differ from others’ (including SCUSA’s) estimates.
▪The PLUS have limited liquidity.
▪The price at which SCUSA would buy or sell your PLUS (if SCUSA makes a market, which it is not obligated to do) will be based on SCUSA’s estimated value of your PLUS.
▪The price of the PLUS prior to maturity will depend on a number of factors and may be substantially less than the stated principal amount.
Risks Relating to General Credit Characteristics
▪Payments on the PLUS are subject to the credit risk of BNS.
Risks Relating to Hedging Activities and Conflicts of Interest
▪Hedging activities by BNS and SCUSA may negatively impact investors in the PLUS and cause our respective interests and those of our clients and counterparties to be contrary to those of investors in the PLUS.
▪We, SCUSA and our other affiliates regularly provide services to, or otherwise have business relationships with, a broad client base, which has included and may include us and the index constituent stock issuers and the market activities by us, SCUSA or our other affiliates for our or their own respective accounts or for our clients could negatively impact investors in the PLUS.
▪Activities conducted by BNS and its affiliates may impact the value of the underlying index and the value of the PLUS.
▪The calculation agent will have significant discretion with respect to the PLUS, which may be exercised in a manner that is adverse to your interests.
▪BNS and its affiliates may publish research or make opinions or recommendations that are inconsistent with an investment in the PLUS.
Risks Relating to Canadian and U.S. Federal Income Taxation
▪Uncertain tax treatment. Significant aspects of the tax treatment of the PLUS are uncertain. You should consult your tax advisor about your tax situation. See “Additional Information About the PLUS — Tax Considerations” and “— Material Canadian Income Tax Consequences” in the preliminary pricing supplement.
Underlying Index
For information about the underlying index, including historical performance information, see “Information About the Underlying Index” in the preliminary pricing supplement.
A-2
FAQ
What leverage factor applies to BNS PLUS linked to EURO STOXX 50?
What is the maximum payment investors can receive at maturity?
When do the Bank of Nova Scotia PLUS mature?
Do the PLUS pay periodic interest?
What happens if the EURO STOXX 50 declines below the initial level?
Are the PLUS listed on a securities exchange?
