The Laurentian Bank is for sale and the Quebec financial institution is already knocking on various doors in the hope of finding a new owner. In the event that it is bought by a rival already well established in the country, this does not bode well for the head office, which is located in Montreal.
Seventh largest bank in the country in terms of assets, Laurentian was limited to saying on Tuesday that it was examining its “strategic options”. However, according to sources familiar with the matter, but who are not authorized to speak publicly, the process is already well under way.
According to our information, the Quebec lender has retained the services of JPMorgan Chase to support it in its efforts. Approaches have even already been attempted, particularly with Quebec financial institutions.
“The bank does not intend to communicate any other information on this subject before the review is completed,” limited itself to indicating Laurentian, without offering more details about the next steps.
Silent
By email, the Desjardins Group did not want to say if it was interested in the assets of Laurentian. At the time these lines were written, National Bank had not responded to questions from The Press. Scotiabank could be a candidate. Last April, its president and CEO Scott Thomson expressed the wish to increase the footprint of the Nova Scotian bank in markets such as Quebec, where it is “under-represented”.
The Royal Bank of Canada and TD Bank – the two largest in the country – should remain on the sidelines. The first must complete the acquisition of the Canadian activities of HSBC for 13.5 billion while the second has its eyes more riveted on the American market.
” I am not surprised [de l’annonce], underlines the professor of strategy at HEC Montreal Louis Hébert, specialized among other things in mergers and acquisitions. The situation is not favorable to a smaller bank. In the Canadian sector, which is concentrated, it is difficult to find a voice. »
Founded in 1846, Laurentian operated 58 branches at the end of its last fiscal year (October 31). Its assets are approximately $51 billion and it offers loans in Quebec, Canada and the United States.
Unless the bank serves as a springboard for a foreign player wishing to establish itself in Canada, the prospects for Laurentian’s head office are not bright, believes Mr. Hébert.
“If it’s a consolidation acquisition of a Canadian player, it’s certain that the head office will disappear,” says the expert. We want to achieve economies of scale and reduce management costs. All Head Office Pledges have an expiry date. »
In Quebec, the bank has 1,500 employees. She did not specify how many people worked at her head office, where there are functions that revolve around finance, legal affairs, human resources and information technology.
Russian mountains
The past few years have been eventful at Laurentian. At the end of 2021, President and CEO Rania Llewellyn unveiled a new transformation plan to focus on niche niches. The strategy put in place in 2015 by his predecessor François Desjardins, which consisted in modernizing the bank’s systems and halving the number of branches, had not borne fruit and weighed on the results.
Mme Llewellyn had succeeded in restoring luster to Laurentian’s performance. In 2022, earnings per share had increased by 22%, well beyond the initial target of 5%. The picture has changed, however, amid an economic slowdown, rising interest rates – which are weighing on loan portfolio growth – as well as new regulatory requirements requiring banks to keep more capital in their reserves.
Added to this are de-unionization campaigns. Two attempts had failed in 2018. However, the scenario had been different a few years later. After a presence of more than five decades within the financial institution, the union, affiliated with the Quebec Federation of Workers, was officially dissolved in April 2021 following a vote by employees.
According to data from the firm Refinitiv, there is only one Quebec shareholder among the 10 main owners of Laurentian, that of the Caisse de dépôt et placement du Québec (CDPQ). The woolen stocking of Quebecers is the most important with its participation of 8.1%.
“We will not make any specific comment as it is a public company, underlined the institution’s spokesperson, Kate Monfette. But we will follow the process closely. »
The story was similar on the side of the Legault government. Claudia Loupret, the press secretary for Finance Minister Eric Girard, only indicated that Quebec would monitor the various stages of the process.
On the Toronto Stock Exchange on Tuesday, Laurentian stock closed at $33.53, up 15 cents, or 0.45%. This gives a market value of 1.46 billion to the lender.
Banque québécoise, executives from elsewhere
Although Laurentian Bank’s head office is in Montreal, the majority of decisions seem to be made in Ontario, where the president lives. Last year, 70% of the organization’s ten “senior executives” lived outside Quebec, according to the lender’s annual information form. The portrait is hardly more brilliant on the side of the board of directors. Only two directors out of 11 are from Quebec. Upon being named head of Laurentian in 2020, Ms.me Llewellyn did not speak French.
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- 3000 people
- Laurentian Bank workforce.
Laurentian Bank
- 2000
- Year Rania Llewellyn was named President and CEO.
Laurentian Bank