Amsterdam-based ING put the unit up for sale earlier this month as part of a series of planned asset divestments to raise funds to repay a Dutch government bailout from the 2008 financial crisis.
Scotiabank will pay cash for the Canadian unit and said it will issue 29m shares at C$52 each for total proceeds of C$1.5bn to help fund the deal.
The deal came as analysts yesterday welcomed reports that ING is to sell its Hong Kong insurance business separately from the other units in the region, arguing that the smaller sell-offs should raise more cash than one large transaction.
The bank told investors at the end of the second quarter that the divestment of the overall group could take part in several stages, and it emerged yesterday Hong Kong is one of those parts.
The overall Asian group is believed to be worth roughly $7bn (£4.2bn), but the bank has failed to find a single buyer. Individually the Hong Kong unit is expected to fetch $1bn.
ING also plans to list its European and US insurance units on stock markets as part of its restructuring.