Laurentian Bank goes up for sale

The Laurentian Bank is for sale and the Quebec financial institution has already started knocking on various doors in the hope of finding a new owner. It remains to be seen whether an offer attractive enough for shareholders will be filed.

The seventh largest bank in the country, Laurentian, headquartered in Montreal but run from Toronto, announced on Tuesday that it was studying its “strategic options”, which means that it could be sold.

According to sources familiar with the matter but who are not authorized to speak publicly, the process is already well under way. Laurentian has retained the services of JPMorgan Chase to advise it in its efforts. Quebec financial institutions are among those that have been approached so far.

“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.

By email, the Desjardins Group did not want to say if it was interested in the assets of Laurentian. At the time of writing these lines, National Bank had not responded to questions sent by 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 Quebec and British Columbia, two markets in the country where it remains “under-represented”.

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.

The Quebec lender is at the heart of a transformation plan presented at the end of 2021 by President and CEO Rania Llewellyn with the aim of restoring luster to profitability as well as to the share price. In recent years, the bank’s performance has been lower than what has been observed in the banking sector in the country.

Added to this are fears of a slowdown, rising interest rates, which are weighing on the growth of the loan portfolio, and new regulatory requirements requiring banks to keep more capital in their reserves.

“I’m not surprised,” says HEC Montréal strategy professor Louis Hébert, who specializes in mergers and acquisitions, among other things. The situation is not favorable to a smaller bank. In the Canadian sector, which is concentrated, it is difficult to find a voice. »

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. »

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.