Laurentian Bank announces split sale to Fairstone Bank and National Bank

Laurentian Bank is being split up and sold, with its commercial operations going to Fairstone Bank of Canada in a $1.9 billion deal while National Bank is buying the retail and small business segment for roughly book value.

The deal is the culmination of years of efforts at the bank to turn itself around or find a buyer as it struggled to compete in a financial industry that increasingly rewards scale.

Under the terms, the more than 175-year-old Laurentian Bank name will live on as part of Fairstone with the head office of the commercial segment to remain in Montreal, and chief executive Éric Provost to continue in his role.

But its presence on the main streets of Quebec won’t.

Laurentian’s 57 branches won’t be transferred over to National Bank, nor will its employees, who will instead have the option to apply for open roles at the bank.

The move will affect the majority of Laurentian’s roughly 2,715 employees, though it’s not clear how many will stay on as part of the commercial operations at Fairstone.

The deal is an acceleration of Laurentian’s push deeper into the commercial side, said Provost in a statement.

“Joining forces with Fairstone Bank will allow us to grow our specialized commercial business even further, while maintaining our brand,” he said.

The commercial focus includes real estate lending, inventory and equipment financing, intermediary services and capital markets activities.

Laurentian customers will benefit from more services and better technology at National, he said.

Part of Laurentian’s struggles was its lag in adapting to new technology, with the bank only launching its first banking app in 2022.

The end of Laurentian as a stand-alone bank adds to a consolidation trend in Canadian banking that has left few small banks operating, though there is rising competition from fintech platforms.

The deal “highlights the challenges in competing within the Canadian lending market (with) a sub-scale franchise,” said Scotiabank analyst Mike Rizvanovic in a note.

He said he sees little risk from a regulatory perspective despite the overlap in markets with National, underlining the relatively small scale of Laurentian.

National Bank will see its customer base expand as it takes on Laurentian’s $10.9 billion in retail loans and deposits and $1.4 billion in small- and medium-enterprise loans and deposit, adding to National’s roughly $594 billion in total assets as the smallest of the Big Six banks.

The deal comes amid “unprecedented consolidation” in the financial sector, MNP managing director Shilpa Mishra said in a recent report.

Acquisitions in recent years include RBC closing its deal to buy HSBC Canada for roughly $13.5 billion last year and National Bank’s purchase of Canadian Western Bank that closed in February.

As well, there was Scotiabank’s partial purchase of KeyCorp in the U.S. and ATB Financial buying Cormark Securities Inc., she noted.

“There has been more M&A activity in the Canadian banking sector over the past two years than in the past two decades,” she said before the Laurentian news broke.

Mishra attributed the trend to a race to build scale and capability in an increasingly competitive global market.

The trend leaves EQB Inc. as the lone publicly-traded smaller bank in the market, noted Rizvanovic.

The consolidation trend can also be seen in Laurentian’s buyer Fairstone.

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 itself grew after it was acquired by Smith Financial Corp. in a roughly $1.7 billion deal in 2023.

Under the deal, Fairstone Bank will pay $40.50 per Laurentian Bank share in cash, while the amount National Bank will pay will be based on outstanding balances at closing.

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

Caisse de dépôt et placement du Québec, owner of about eight per cent of Laurentian shares, said in a statement that it supports the deal, given the competitive banking landscape.

Overall, the deal looks about as good as could be expected, said Jefferies analyst John Aiken in a note.

“The sale of Laurentian Bank is an exit that benefits current shareholders with an exit that we did not view as likely.”

He said the deal is also a boost for National.

“National not only benefits by increasing its scale in its home province but does not have to deal with the legacy issues associated with Laurentian’s branch system,” said Aiken.

“Getting the assets, deposits and mutual funds at book value is simply icing on the cake.”

This report by The Canadian Press was first published Dec. 2, 2025.

Companies in this story: (TSX:LB, TSX:NA)