Post by : Meena Ariff

Laurentian Bank is set to undergo a significant transformation as it finalizes a $1.9 billion deal to sell its commercial operations to Fairstone Bank of Canada, while National Bank will acquire its retail and small business sectors at approximately book value.

This strategic move comes after extensive efforts by the 175-year-old financial institution to secure a turnaround or a buyer that would satisfy its shareholders.

Fairstone will maintain the Laurentian branding, with its commercial headquarters continuing to operate from Montreal, led by CEO Éric Provost. However, the 57 retail branches in Quebec will not be transferred to National Bank, requiring employees to apply for available roles at the purchasing institutions.

The transaction will affect the majority of Laurentian’s approximately 2,715 workforce, although some will potentially remain with Fairstone’s commercial division. Provost emphasized that the deal accelerates Laurentian's commitment to focusing on commercial ventures such as real estate lending, financing for inventory and equipment, intermediary services, and capital market initiatives.

Customers are anticipated to see enhanced services and technology from National Bank, who will address one of Laurentian’s longstanding challenges—delayed digital transformation, with their first mobile application being launched only in recent years.

Fairstone is set to purchase Laurentian shares for $40.50 each in cash, while the compensation from National Bank will hinge on closing balances. Approval from two-thirds of Laurentian's shareholders is required for the Fairstone deal to proceed.

The Caisse de dépôt et placement du Québec, owning about eight percent of Laurentian's shares, endorses the arrangement, citing the competitive nature of the banking sector.

For Fairstone, this acquisition is another step towards growth following its merger with Home Trust last year, expanding its customer base to nearly two million across 255 branches. National Bank will acquire Laurentian’s retail loans and deposits totaling $10.9 billion, along with $1.4 billion in small and medium enterprise loans and deposits.

Analyst John Aiken from Jefferies characterized the transaction as a favorable outcome for Laurentian shareholders and a strategic enhancement for National Bank, allowing them to sidestep legacy branch complications while acquiring valuable assets at book value.

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