Montreal-based Laurentian Bank agreed to sell its retail and small-business banking portfolios to National Bank of Canada, and combine its commercial lending operations with those of alternative mortgage lender Fairstone Bank, the companies announced Tuesday.
The deals, if finalized, would end three years of soul searching for Laurentian, which, as of March, ranked as Canada’s eighth-largest lender. The bank launched a strategic review in 2022, and aimed initially to expand “by buying a niche finance business in sectors such as commercial lending, or potentially merging with another financial institution.”
As it turns out, it sold to one. Fairstone will acquire Laurentian’s issued and outstanding common stock for roughly C$1.9 billion ($1.4 billion) in cash, or about C$40.50 per share, the companies said Tuesday. That’s a 20% premium over the bank’s closing price of C$33.76 from Monday.
Laurentian, though, will retain its brand identity and its head office in Montreal, and Éric Provost, the bank’s president and CEO, will continue in that role, the companies said.
The transaction, projected to close late next year, will give Fairstone additional scale and help the lender accelerate its growth in commercial real estate, particularly in Québec.
"We view Québec as a key market and are excited to continue building our presence with the expertise we're acquiring from Laurentian Bank," Fairstone CEO Scott Wood said in a statement. “This transaction strengthens Fairstone Bank's competitive position, diversifies revenue streams, and deepens our national lending footprint.”
The deal also stands to give Fairstone complementary business lines in inventory and equipment financing, the companies said.
As much as the deals represent a turning of the page for Laurentian, they also mark the continuation of a trend in Canadian retail lending. National Bank, the smallest of Canada’s six systemically important banks at C$553 billion in assets, is buying the retail footprint of Canada’s eighth-largest lender less than a year after it acquired the nation’s ninth-largest, Edmonton-based Canadian Western.
Critically, once the transaction closes, all of Laurentian’s Québec-based branches will be closed, and its employees will not be transferred to National Bank, the lenders said. Affected Laurentian employees will be able, however, to apply for open roles at National Bank, the companies added.
"Leveraging our strong presence in Québec, this transaction aligns with our domestic growth strategy and is a natural fit," National Bank CEO Laurent Ferreira said in a statement. "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."
Provost said partnering with National Bank “will allow our customers to benefit from a broader range of services and improved, modern technology."
Indeed, the deal may serve as a showcase for how difficult it is for a Canadian lender outside the six largest to gain scale.
Laurentian doubled down on its commercial lending in 2024, asserting that would be its “growth engine.”
But that announcement came after larger lenders Scotiabank and TD reportedly passed on acquiring Laurentian in 2023. Provost’s predecessor as CEO, Rania Llewellyn — then one of Canada’s foremost women bankers — stepped down shortly thereafter.
From Laurentian, National Bank will add roughly C$7.6 billion in retail deposits and another C$3.3 billion in retail loans, plus about C$1.4 billion in SME loans and deposits. It will also distribute mutual funds, previously under Laurentian, totaling roughly C$3.4 billion.
The National Bank transaction, expected to be 1.5% to 2% accretive to the acquirer’s earnings per share in 2027, is not subject to approval by two-thirds of Laurentian’s shareholders. The Fairstone deal, however, is — and those investors will vote at a special meeting, presumably in 2026’s first quarter.
Laurentian’s largest shareholder, La Caisse — with an 8% stake — signaled conditional approval of the deal, so long as Laurentian's commercial head office stays in Montreal and Fairstone's head office moves there.
