Canadian Western Bank shareholders approve sale

An important step was taken on Tuesday by the National Bank towards the completion of the largest transaction in its history.

Shareholders of Canadian Western Bank have approved the sale of the Edmonton-based lender to National Bank at a meeting. To be accepted, the project had to obtain the support of at least two-thirds of the institution’s shareholders.

The resolution was approved by 99.78% of the votes cast by shareholders.

To come to fruition, however, the transaction must now receive approval from the Competition Bureau, the Office of the Superintendent of Financial Institutions and, ultimately, the Canadian Department of Finance.

If the transaction receives the necessary regulatory approvals, National Bank can hope to complete the operation by the end of next year.

The proposed transaction, valued at $5 billion, was announced on June 11 and is to be carried out through a share exchange. Each share of the Canadian Western Bank would be exchanged for 0.45 shares of the National Bank.

The acquisition should allow the National Bank to accelerate its growth in the country, particularly in Alberta and British Columbia.

National Bank CEO Laurent Ferreira said Wednesday during a conference call with analysts that the bank is working closely with the Office of the Superintendent of Financial Institutions and the Competition Bureau, and that things are “progressing very well.”

“We will be able to inform you in due course about the closing date and we will be able to give you more information about the synergies, both in terms of costs, financing and revenues,” he said.

While it is still too early to provide details on the synergies to be generated, executives nevertheless maintain that Canadian Western Bank will improve National Bank’s commercial banking portfolio by approximately 52%, increasing national earning capacity and improving the diversification of loans and revenues.

Founded 40 years ago, Canadian Western Bank has some 40 branches, mainly located in western Canada and Ontario, and a loan portfolio worth $37 billion.

Canadian Western Bank reported quarterly results Friday that were hit by a significant increase in provisions for losses on impaired loans, which doubled to $55 million from the previous quarter.

Management said the increase was mainly due to two loans where borrower-specific circumstances led to unusually high provisions for those specific exposures. The bosses said the situation was unlikely to be repeated.

Two days earlier, the National Bank had impressed investors by presenting financial results that exceeded market expectations by a margin of 8%.