Laurentian Bank Sells to Fairstone and National Bank in Major Restructuring

Post by : Mina Rahman

Laurentian Bank is undergoing a significant transformation, with its commercial operations set to be acquired by Fairstone Bank of Canada for $1.9 billion. National Bank will take over its retail and small business segments at near book value.

This decision comes as the 175-year-old institution faces ongoing struggles to satisfy shareholders and stabilize its operations.

Post-deal, the Laurentian brand will persist under Fairstone, which will maintain its commercial headquarters in Montreal, with CEO Éric Provost in place. However, the 57 retail branches in Quebec will not be transitioned to National Bank, and existing staff will need to pursue new opportunities within the acquiring banks.

This move will affect a large portion of Laurentian’s approximately 2,715 employees; yet, a fraction may stay on with Fairstone’s commercial sector. Provost emphasized that this acquisition enhances Laurentian’s emphasis on commercial initiatives, which include real estate lending and capital markets operations.

Clients should anticipate improved services and technological advancements at National Bank, which addresses one of Laurentian’s critical hurdles—its delayed digital transformation, exemplified by the recent launch of its mobile application.

Fairstone will purchase shares at $40.50 each in cash, while National Bank's compensation will hinge on closing figures. A two-thirds majority of Laurentian shareholders needs to approve the transaction with Fairstone.

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

For Fairstone, this acquisition coincides with its growth trajectory following a merger with Home Trust last year, broadening its reach to approximately two million customers across 255 locations. Concurrently, National Bank will obtain Laurentian’s $10.9 billion in retail loans and deposits, in addition to $1.4 billion in small- and medium-enterprise loans and deposits.

Analyst John Aiken from Jefferies characterized the arrangement as a beneficial exit for Laurentian stakeholders and a strategic gain for National Bank, allowing it to circumvent longstanding branch challenges while acquiring valuable assets and deposits at book value.

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