Laurentian Bank is undergoing a restructuring and sale, with Fairstone Bank of Canada acquiring its commercial operations in a $1.9 billion agreement, while National Bank is purchasing the retail and small business segment at book value. This deal marks the conclusion of a lengthy period of challenges for the bank, which has been striving to revitalize itself or find a suitable buyer to meet shareholder expectations.
As per the terms of the agreement, the Laurentian brand will continue under Fairstone, with the commercial segment’s headquarters remaining in Montreal and CEO Éric Provost retaining his position. However, the bank’s physical presence in Quebec’s main streets will cease to exist. National Bank will not be acquiring Laurentian’s 57 branches or its employees, who will have the opportunity to apply for positions within the bank.
The majority of Laurentian’s approximately 2,715 employees will be impacted by this transition, although the exact number remaining with Fairstone’s commercial operations is currently uncertain. Provost highlighted that this deal signifies Laurentian’s strategic shift towards a greater focus on commercial activities, emphasizing specialized services such as real estate lending, equipment financing, and capital markets operations.
Customers of Laurentian are expected to benefit from enhanced services and technology through National Bank. The bank had faced challenges in adapting to modern technology, having launched its first app only recently. The agreement is still subject to approval, with Fairstone Bank offering $40.50 per Laurentian Bank share in cash and National Bank’s payment based on outstanding balances at closing.
The Fairstone deal necessitates a two-thirds majority vote from Laurentian Bank shareholders for approval. The Caisse de dépôt et placement du Québec, which owns approximately eight percent of Laurentian shares, expressed support for the deal due to the competitive nature of the banking industry. The acquisition represents a significant growth milestone for Fairstone, following its merger with Home Trust and expansion to two million customers and 255 branches.
National Bank stands to expand its customer base by acquiring Laurentian’s retail and small business loans and deposits. Analysts view the deal positively, with Jefferies analyst John Aiken noting that it benefits Laurentian’s shareholders and allows National Bank to bolster its presence in Quebec without inheriting legacy branch system issues. Aiken described the acquisition of assets, deposits, and mutual funds at book value as a valuable addition for National Bank.