Laurentian Bank is undergoing a significant restructuring and acquisition process. Fairstone Bank of Canada is set to acquire its commercial operations in a substantial $1.9 billion deal, while National Bank will take over the retail and small business segment at a value close to book value.
After facing challenges for years, Laurentian Bank, with a history spanning over 175 years, has reached a pivotal moment in its journey of transformation or seeking a suitable buyer to meet shareholder expectations.
As part of the agreement, the Laurentian brand will persist within Fairstone, retaining its commercial segment’s headquarters in Montreal under the leadership of current CEO Éric Provost. However, the familiar presence of Laurentian’s 57 branches in Quebec will not transition to National Bank, offering employees the opportunity to apply for available positions within the acquiring bank.
The majority of Laurentian’s approximately 2,715 employees will be impacted by this transition, with uncertainties regarding how many will continue their roles within Fairstone’s commercial operations.
Provost emphasized that the deal signifies Laurentian’s strategic shift towards strengthening its commercial offerings. By joining forces with Fairstone Bank, the bank aims to enhance its specialized commercial services while upholding its brand integrity.
The commercial focus will encompass various financial activities such as real estate lending, financing for inventory and equipment, intermediary services, and capital market operations. Laurentian customers are expected to benefit from expanded services and advanced technology through National Bank.
The deal’s completion is contingent on Fairstone Bank’s payment of $40.50 per Laurentian Bank share in cash and National Bank’s payment based on outstanding balances at closing. Approval from a two-thirds majority of Laurentian Bank shareholders is required for the Fairstone deal to proceed.
The move marks a significant growth milestone for Fairstone, an alternative lender that recently merged with Home Trust, consolidating its customer base to around two million customers and 255 branches. National Bank will witness an expansion in its customer base by taking on Laurentian’s retail and small and medium enterprise loans and deposits.
Financial analyst John Aiken views the deal positively, considering it a beneficial exit strategy for current Laurentian Bank shareholders. He also highlights the advantages for National Bank in terms of scaling its operations in the home province without inheriting legacy issues associated with Laurentian’s branch network.
In conclusion, the acquisition deal is seen as a mutually beneficial arrangement for all parties involved, positioning the banks for future growth and development in the competitive banking landscape.
