Laurentian Bank to Be Split and Sold in $1.9 Billion Deal
In a significant development, Laurentian Bank is set to undergo a split and sale, with Fairstone Bank of Canada acquiring its commercial operations in a $1.9 billion transaction, while National Bank is poised to purchase the retail and small business segment at approximately book value.
This move comes after years of challenges for the 175-year-old bank in its efforts to revamp itself or attract a buyer willing to meet shareholder expectations. As part of the deal, the Laurentian brand will continue under Fairstone, with the commercial segment’s headquarters remaining in Montreal and current CEO Éric Provost retaining his position.
However, despite these changes, Laurentian’s 57 branches will not transition to National Bank, and its employees will have the opportunity to apply for available positions within the bank. The transition is expected to impact the majority of Laurentian’s workforce, although the exact number of employees who will continue with Fairstone’s commercial operations is not yet determined.
Provost highlighted that this deal signifies Laurentian’s strategic shift towards a stronger focus on commercial activities. He emphasized that the collaboration with Fairstone Bank will enable the expansion of specialized commercial services while upholding the bank’s brand identity.
The deal also entails Fairstone Bank paying $40.50 per Laurentian Bank share in cash, subject to approval by a two-thirds majority vote of Laurentian Bank shareholders. Notably, the Caisse de dépôt et placement du Québec, holding about eight per cent of Laurentian shares, expressed support for the agreement, citing the competitive banking environment.
On the other hand, National Bank stands to benefit from the acquisition by expanding its customer base with the addition of Laurentian’s retail loans, deposits, and small to medium enterprise loans and deposits. The deal is seen as a positive outcome for all parties involved, with Jefferies analyst John Aiken noting that it benefits Laurentian’s shareholders and provides National Bank with growth opportunities without the burden of legacy issues associated with Laurentian’s branch network.
The agreement represents a significant milestone for both Fairstone Bank and National Bank, signaling growth and consolidation within the Canadian banking sector.