Laurentian Bank has announced a significant restructuring and sale, with Fairstone Bank of Canada acquiring its commercial operations in a deal worth $1.9 billion, while National Bank is set to take over the retail and small business segment at book value.
This move comes after years of challenges for the over 175-year-old bank as it sought to revamp its operations or attract a suitable buyer to satisfy shareholders. As part of the agreement, the Laurentian brand will continue under Fairstone, with the commercial segment’s headquarters staying in Montreal and CEO Éric Provost retaining his position.
However, the familiar presence of Laurentian Bank on Quebec’s main streets will be no more. The 57 branches will not be transferred to National Bank, and employees will have the option to apply for positions within the bank. The majority of Laurentian’s approximately 2,715 employees will be impacted, although the exact number remaining with Fairstone for commercial operations is uncertain.
Provost highlighted that this deal accelerates Laurentian’s focus on the commercial side, emphasizing the growth potential in specialized commercial services in collaboration with Fairstone Bank. The commercial operations will include real estate lending, equipment financing, intermediary services, and capital market activities.
Customers are expected to benefit from enhanced services and technology at National Bank. Laurentian had faced challenges in keeping up with technological advancements, with the launch of its first app only occurring recently.
The agreement is still pending approval, with Fairstone Bank offering $40.50 per Laurentian Bank share in cash, subject to a two-thirds majority vote by Laurentian Bank shareholders. The Caisse de dépôt et placement du Québec, holding around eight percent of Laurentian shares, expressed support for the deal due to the competitive banking environment.
This acquisition marks a significant growth opportunity for Fairstone Bank, which previously merged with Home Trust, expanding its customer base to approximately two million and operating 255 branches. On the other hand, National Bank will increase its customer base by taking on Laurentian’s retail loans, deposits, and small to medium enterprise loans and deposits.
Analysts view the deal positively, considering it beneficial for current shareholders and advantageous for National Bank in expanding its presence in the province without the legacy issues associated with Laurentian’s branch network.
