Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is often overlooked in favour of its larger peers, but investors are beginning to realize that Canada’s third-largest bank might be the best pick in the current environment.

Here are the reasons why I think investors should consider holding Bank of Nova Scotia in their portfolios.

1. International operations

Bank of Nova Scotia is Canada’s most international bank with operations located in more than 50 countries. The company’s core focus outside of Canada lies in a strategic group of Latin American countries. Colombia, Mexico, Chile, and Peru have formed a trade bloc called the Pacific Alliance with an aim to enable the free movement of goods, services, and capital among the member states.

The four countries have made significant progress with more than 90% of trade barriers now removed. They have even integrated their stock markets.

Most Canadian investors don’t realize the importance of this pact, let alone the opportunities it presents.

Bank of Nova Scotia sees the potential very clearly, and has been investing heavily in the region for the past five years. In fact, the company has spent more than US$7 billion to establish a solid footprint in all four of these countries.

As companies take advantage of the free trade arrangements, they require a wide variety of new financial services and support. By having a presence in all four markets, Bank of Nova Scotia is able to meet these growing needs.

While the corporate opportunities abound, the retail potential in this region is also compelling given the fact that more than 200 million people live in the combined markets.

The middle class is expanding and that boosts demand for credit cards, car loans, lines of credit, and investment products.

Bank of Nova Scotia’s international investments are starting to pay off. In Q2, Latin American loans increased by 7% and deposits rose by 6% compared with the same period in 2014.

2. Restructuring

Last November Bank of Nova Scotia took a one-time charge of $451 million as it set in motion a plan to reduce head count and improve efficiency in all areas of its operations.

Restructuring efforts of this scale take time to bear fruit on the bottom line, but investors should start to see the positive effects in the back half of 2015. Management said the process should eventually deliver expense reductions of $120 million per year.

3. Dividends

Bank of Nova Scotia pays a dividend of $2.72 per share that yields 4%. The company has a strong history of increasing the payout, and that trend should continue.

4. Value

At some point, the market will put a higher value on the growth potential of the international operations. The stock currently trades at an attractive 11 times forward earnings and 1.7 times book. Long-term investors should be comfortable holding the stock at the current price.

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Fool contributor Andrew Walker has no position in any stocks mentioned.