BNS.US, a regional bank, is buying 14.9% of KeyCorp shares, sending KEY.US up more than 18% in pre-market trading.

As part of its focus on the North American business, Bank of Nova Scotia (BNS.US) agreed to buy a minority stake in Keycorp (KEY.US), one of the hardest hit US regional banks during last year's turmoil. Keycorp shares rose 18.07% premarket to $17.25.

BNS announced Monday that it would buy 14.9% of Keycorp for $1.77 billion, or $17.17 a share, a 11% premium to the weighted average of the past 20 trading days.

The BNS CEO said the investment "significantly increases our capital deployed to targeted markets." BNS has operations in Canada, the US and Mexico, while Keycorp has about 1,000 branches in the US, offering commercial and retail banking and investment advisory and services, managing about $187 billion in assets.

Keycorp is considering a balance-sheet reorganization to shorten the duration of some of its investment portfolios. That echoes a year ago, when the Fed's rapid rate hikes led to a battering of bondholders' investments, with creditors taking losses on their face and investors selling Keycorp and many of its peers.