Laurentian Bank plans to make strides with $1.9 billion split sale to National Bank and Fairstone Bank

Éric Provost, president & CEO of Laurentian Bank, joins BNN Bloomberg to discuss the sale to National Bank and Fairstone Bank.

Laurentian Bank wants to move away from the big bank model and focus on commercial banking, according to the CEO of the company.

The company said it was looking for partnerships to make it happen, Éric Provost, president and chief executive officer of Laurentian Bank told BNN Bloomberg.

The bank, on Tuesday, announced a split deal with Fairstone Bank and National Bank worth $1.9 billion.

“This opportunity for us is amazing because we’ll be able to continue and grow in segments where we exceed and I believe this will create even more opportunities for us in the future,” said Provost.

The Laurentian name will remain as part of Fairstone. The commercial focus includes real estate lending, intermediary services and capital markets activities and inventory and equipment financing.

National Bank willl acquire Laurentian’s retail and small-and medium-sized enterprise (SME) portfolios such as retail loans and deposits.

Laurentian’s retail customers are poised to move to National Bank.

“We look forward to welcoming Laurentian Bank’s retail, SME, and syndicated loan clients, who will soon benefit from National Bank’s leading digital services, an expanded range of financial products, and access to our extensive branch network and business banking teams,” said Laurent Ferreira, president and CEO of National Bank in a news release.

As a small, regional bank, Laurentian was faced with challenges in competing with larger institutions. Provost said the bank faced gaps trying to attract new customers. He said the investment required for digital banking tools was not justified by the expected return if undertaken independently.

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The bank can now leverage its new partnerships to offer their customers a broad scope of products and significantly better technology.

Provost will stay in his role. Laurentian’s 57 branches will not be transferred to National Bank. The shakeup is expected to affect 2,715 employees who are not guaranteed a position but have the option to apply for open roles at the bank.

“That’s the sad part,” said Provost. “There’s always a component in those strategic decisions that that makes it so difficult.”

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The transaction will provide Fairstone Bank additional scale and accelerate growth in commercial real estate across the country, particularly in Québec.

“This transaction strengthens Fairstone Bank’s competitive position, diversifies revenue streams, and deepens our national lending footprint,” said Scott Wood, president and CEO of Fairstone Bank.

Last year, Fairstone merged with Home Trust, creating a lender focused on lower-credit worthy clients with over two million customers and 255 branches.

Before that, Home Trust grew after it was acquired by Smith Financial Corp. in a roughly $1.7 billion deal in 2023.

The Fairstone deal is subject to approval by a two-thirds majority vote by Laurentian Bank shareholders.

EQB Inc., which operates Equitable Bank, remains as the lone publicly traded smaller bank on the market.

With files from the Canadian Press