Bank of Nova Scotia Launches $10.3 Million Autocallable Notes Tied to S&P 500 and EURO STOXX 50 Indices

Note Structure and Automatic Call Feature

The Bank of Nova Scotia's newly issued notes incorporate an automatic call provision designed to potentially limit the issuer's downside exposure while capping investor upside. According to the filing, the notes will be automatically called if the closing value of each reference asset—the S&P 500 Index and the EURO STOXX 50 Index—is equal to or exceeds its initial value on any designated call observation date. Upon automatic call, investors receive a cash payment per note equal to the principal amount plus any contingent coupon payable on that contingent coupon payment date, including any accrued unpaid coupons. After an automatic call, no further payments will be made on the notes.

This automatic call structure caps investor returns at the principal plus accrued coupons if either index recovers to its initial level. It allows the bank to terminate its obligations early, benefiting from favorable market conditions while limiting total return potential. The specific call observation dates are detailed in the pricing supplement, though not listed in the excerpt provided.

Contingent Coupon Payment Terms

The notes feature a conditional coupon structure with memory provisions, meaning unpaid coupons can accumulate for future payment. The filing states that if the notes have not been automatically called and the closing value of each reference asset on any contingent coupon observation date meets or exceeds its contingent coupon barrier, a contingent coupon will be paid for that date plus any previously unpaid contingent coupons. This memory feature allows investors to receive accrued unpaid coupons on subsequent payment dates if conditions are met.

If the closing value of any reference asset on a contingent coupon observation date before the final valuation date falls below its barrier, the contingent coupon for that date will not be paid and instead becomes an unpaid contingent coupon. This unpaid amount remains in "memory" and may be paid on the next date when a coupon is payable. The announcement highlights that coupon payments are performance-dependent and not guaranteed, meaning investors may receive no contingent coupons.

Maturity Valuation and Principal Repayment

At maturity on July 26, 2029, if the notes have not been automatically called, payments depend on the performance of the "least performing reference asset"—the asset with the lowest percentage change from initial to final value. If the final value of this asset is equal to or above its barrier, investors will receive the principal amount plus any contingent coupon due at final valuation and any accrued unpaid coupons.

If the least-performing asset’s final value is below its barrier, investors will incur a loss equal to that asset’s depreciation and may lose up to 100% of principal. This feature presents significant downside risk, as the worst-performing index determines the final payoff. The notes are unsubordinated and unsecured debt securities, so payments depend on the creditworthiness of the Bank of Nova Scotia.

Offering Details and Settlement

The offering closed on July 21, 2026, with trade and closing dates on July 21 and settlement on July 24, 2026. The notes have an approximate 3-year term if not called early. The original issue price was 100% of principal, requiring a minimum investment of $1,000, with increments of $1,000 thereafter.

These notes carry CUSIP 063941BM9 and ISIN US063941BM94 for secondary market tracking. They will not be listed on any U.S. securities exchange or automated quotation system, limiting liquidity. All payments will be made in cash rather than physical settlement or stock delivery.

Underwriting Commission and Pricing

The underwriting commission is 2.00%, totaling $206,040 from the $10.302 million issuance. Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, purchased the notes at the original issue price and agreed to resell them to Citigroup Global Markets Inc. The bank’s net proceeds were $10,095,960, representing 98.00% of the issue price after commission.

The initial estimated value of the notes at pricing was $971.85 per $1,000 principal, below the $1,000 issue price. This reflects the bank’s internal pricing models, which incorporate funding rates, underwriting discount, and structuring costs including hedging. The announcement cautions that note values fluctuate and cannot be precisely predicted.

Estimated Value and Secondary Market Insights

The Bank of Nova Scotia’s estimated value is based on internal models considering funding rates and market assumptions. The economic terms reflect the bank’s internal funding rate—the cost to borrow via similar market-linked notes—plus underwriting and structuring costs. This internal rate is generally lower than conventional fixed-rate debt issuance rates, reducing investor economic terms.

Assuming stable conditions, Scotia Capital may initially trade the notes in the secondary market at prices exceeding estimated value for about three months post-issue, effectively reimbursing some hedging costs. After this period, secondary market pricing is expected to align more closely with estimated value and market factors.

Credit Risk and Insurance Information

The notes are unsubordinated, unsecured obligations of the Bank of Nova Scotia, not backed by collateral. Payments depend on the bank’s creditworthiness; financial distress or insolvency could delay or prevent coupon and principal payments, risking total loss.

The notes are not insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation, or any other governmental agency in Canada, the U.S., or elsewhere. Investors have no government-backed protection, underscoring the importance of assessing the bank’s credit risk before investing.

Reference Assets and Derivative Characteristics

These notes are derivatives linked to the price return of the least-performing asset between the S&P 500 Index and the EURO STOXX 50 Index. Investors do not hold any direct economic interest, claim, or ownership rights in the indices or their constituent stocks, including voting or dividend rights.

All payments will be made in cash, not in shares. The notes represent contractual obligations of the bank to pay cash amounts based on index performance, exposing investors to both market risk and the bank’s credit risk.

Market-Making and Affiliate Roles

Scotia Capital (USA) Inc., an affiliate of the Bank of Nova Scotia, may engage in market-making activities involving these notes after initial sale. Unless otherwise disclosed at sale, the pricing supplement is used in market-making transactions, allowing Scotia Capital to buy and sell from its inventory at self-determined prices, potentially creating conflicts of interest due to bid-ask spreads.

Affiliate involvement in distribution and secondary market activities may present financial conflicts with investors’ interests. Supplemental distribution documents address these conflicts in detail, and investors are advised to review these disclosures thoroughly.

Regulatory Status and Investment Risks

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved the notes or reviewed the accuracy of the pricing supplement, product supplement, underlier supplement, prospectus supplement, or prospectus. Any contrary representation is a criminal offense.

The announcement stresses that investing in these notes involves risks. Investors should consult "Additional Risks" on page P-11 of the pricing supplement, "Additional Risk Factors Specific to the Notes" on page PS-6 of the product supplement, and "Risk Factors" on page S-2 of the prospectus supplement and page 8 of the prospectus. The filing highlights risks related to estimated value and liquidity, noting that the secondary market may be limited and pricing may be difficult without active trading.