Montreal – December 2, 2025
Laurentian Bank of Canada is set to disappear as a stand‑alone full-service bank after striking a complex break‑up deal that will see Fairstone Bank of Canada acquire the institution for about C$1.9 billion in cash, while National Bank of Canada scoops up its retail and small‑business operations. [1]
The move, announced on December 2, 2025, dramatically accelerates Laurentian’s shift into a specialized commercial lender and caps years of strategic uncertainty at Canada’s ninth‑largest bank. [2]
Deal Overview: Fairstone Buys Laurentian, National Bank Takes the Branch Customers
Under the agreements announced Tuesday:
- Fairstone Bank will acquire all issued and outstanding common shares of Laurentian Bank for C$40.50 per share in cash, valuing the deal at about C$1.9 billion (roughly US$1.4 billion). [3]
- The offer represents a premium of about 20% to Laurentian’s C$33.76 closing price on December 1 and about 22% over the 20‑day volume‑weighted average price. [4]
- Before Fairstone’s acquisition closes, National Bank of Canada will buy Laurentian’s retail and SME (small‑ and medium‑sized enterprise) banking portfolios and syndicated loan portfolio under a separate asset deal. [5]
The retail and SME portfolios being sold to National Bank are substantial:
- Retail loans: about C$3.3 billion
- Retail deposits: about C$7.6 billion
- SME loans: about C$0.8 billion
- SME deposits: about C$0.6 billion (figures as of July 31, 2025). [6]
National Bank will not acquire Laurentian’s physical branches or employees. Laurentian will close its Québec branches at “conversion,” while affected staff may apply for roles at National Bank via a dedicated channel. [7]
The acquisition will be staged:
- National Bank transaction closes first, transferring the retail, SME and syndicated loan books. [8]
- Fairstone’s share acquisition closes immediately afterward, leaving a streamlined, commercial‑focused Laurentian owned by Fairstone Bank. [9]
Laurentian Bank: From Failed Sale in 2023 to Full Break-Up in 2025
The announcement marks a dramatic turn for a bank that tried and failed to sell itself in 2023. After a lengthy strategic review that explored mergers and outright sale, Laurentian ended the process without a buyer, promising instead a focus on “efficiency and simplification.” [10]
That earlier disappointment hit shareholder confidence hard, and the bank subsequently embarked on a restructuring that included:
- Workforce reductions of around 2%
- Closure of its equity research unit
- Downsizing office space and shelving certain technology projects
- Significant impairment and restructuring charges that pushed the bank to a C$117.5 million loss in Q2 2024. [11]
Under CEO Éric Provost, who rose from head of commercial banking to the top job after the 2023 review, Laurentian unveiled a refreshed strategy centred on:
- Commercial real estate lending
- Equipment and inventory financing
- Intermediary services and capital markets
The new deal essentially fast‑forwards that plan. Laurentian will exit retail and SME banking altogether and emerge as a pure commercial institution under Fairstone’s ownership, with its brand and head office remaining in Montreal. [12]
Terms of the Transaction: Premium, Protections and Timeline
Price and premium
Fairstone’s C$40.50‑per‑share cash offer gives Laurentian shareholders a clean exit at a meaningful premium to the bank’s pre‑announcement trading levels, after years of underperformance versus Canada’s big‑bank index. [13]
Shareholder and regulatory approvals
The deal is far from a done deal in practical terms:
- The acquisition requires approval from at least two‑thirds (66⅔%) of votes cast at a special meeting of Laurentian shareholders, expected in Q1 2026. [14]
- It is also subject to key regulatory approvals, likely including the Office of the Superintendent of Financial Institutions (OSFI), the Competition Bureau and the federal Minister of Finance, among others. (The press release refers broadly to “key regulatory approvals.”) [15]
- The National Bank asset deal must close before the Fairstone acquisition; the latter is conditional on the former. [16]
Assuming approvals arrive on schedule, both the National Bank and Fairstone transactions are expected to close by late 2026. [17]
Break fees and deal protections
The agreements include robust protections on both sides:
- C$40 million break fee payable by Laurentian to Fairstone if the bank backs a superior competing offer under certain conditions.
- C$40 million reverse break fee payable by Fairstone to Laurentian if key regulatory approvals are not obtained by the outside date. [18]
- A separate C$10 million termination fee structure applies between Laurentian and National Bank, with reciprocal reverse break‑fee provisions linked to regulatory outcomes. [19]
Laurentian’s board established a special committee of independent directors, retained J.P. Morgan Securities Canadaas lead financial adviser and Blair Franklin as independent adviser. Both delivered fairness opinions concluding the consideration is fair to shareholders, according to the company. [20]
The bank also secured explicit support from Caisse de dépôt et placement du Québec (CDPQ), which holds roughly 8% of Laurentian’s common shares. CDPQ’s backing is contingent, in part, on maintaining Laurentian’s commercial head office in Québec and moving Fairstone’s head office to Montreal, as well as ensuring retail clients are served by a strong Québec‑based bank through National. [21]
What happens to Laurentian’s shares?
If the deal closes as planned:
- Laurentian’s common shares will be delisted from the Toronto Stock Exchange (TSX).
- Several capital instruments — including certain preferred share series and limited‑recourse capital notes — are expected to remain outstanding; at least one preferred series will remain TSX‑listed, so Laurentian would continue as a reporting issuer. [22]
National Bank’s Role: Gaining Scale in Québec Retail and SME Banking
While Fairstone is buying the corporate shell and commercial franchise, National Bank of Canada is effectively taking over Laurentian’s main‑street customers:
- It will acquire all retail and SME banking portfolios and Laurentian’s syndicated loan portfolio under definitive agreements signed in parallel with the Fairstone deal. [23]
- National Bank says Laurentian customers will gain access to a broader range of products, modern digital banking, and a larger branch and business‑banking network, particularly in Québec. [24]
Critically, though:
- No Laurentian branches or employees are being transferred to National Bank. Laurentian will close its branches and manage the associated staffing changes before the retail transaction closes. [25]
National Bank has also pledged to double Laurentian’s corporate philanthropic program, aiming to reassure local communities that the bank’s longstanding community investments will not disappear with the Laurentian brand from retail banking. [26]
From a customer‑protection standpoint, both National Bank and Fairstone Bank are CDIC‑member institutions, meaning eligible deposits (such as standard savings accounts and GICs) remain protected under Canada Deposit Insurance Corporation rules, subject to the usual limits and categories. [27]
Who Is Fairstone Bank – and Why Does It Want Laurentian?
For many Canadians, Fairstone Bank is better known through its consumer‑facing brands than as a traditional bank name. Its evolution has been rapid:
- The business traces its roots to CitiFinancial Canada, which was acquired by investors and rebranded as Fairstone Financial in 2017. [28]
- Duo Bank of Canada, a deposit‑taking bank, later acquired Fairstone and rebranded itself as Fairstone Bank of Canada in 2022. [29]
- In 2024, Fairstone Bank and Home Trust Company agreed to merge, creating what Ontario Teachers’ Pension Plan describes as “the leading alternative lender in Canada,” serving more than 2 million customers through over 250 branches. [30]
Today, Fairstone Bank and its subsidiaries — including Fairstone Financial and Home Trust — offer:
- Residential and commercial mortgages
- Unsecured and secured personal loans (online and through a national branch network)
- Auto and retail point‑of‑sale financing
- Credit cards and rewards programs
- Consumer deposits and GICs
The group positions itself as Canada’s “most accessible and responsible” consumer lending bank, focusing heavily on near‑prime borrowers and underserved segments that often fall outside the comfort zone of the Big Six banks. [31]
Acquiring Laurentian’s commercial franchise offers Fairstone several strategic benefits:
- Instant scale in commercial real estate, equipment and inventory financing across Canada, with particular strength in Québec. [32]
- A respected Laurentian brand and 175‑year legacy, which Fairstone has committed to retain along with the Montreal head office. [33]
- A chance to deepen its national lending footprint and diversify revenues beyond consumer credit into more institutional and mid‑market relationships. [34]
Fairstone CEO Scott Wood frames the deal as a “disciplined step” that adds scale in commercial lending, broadens product lines and reinforces the bank’s value‑creation plan, according to the Laurentian press release. [35]
The transaction also aligns with Fairstone’s shareholder base. Smith Financial Corporation, which holds a majority stake in Fairstone, has signalled interest in building out a broader financial‑services platform in Canada; Ontario Teachers’ and Centerbridge Partners remain significant investors and have previously emphasised the growth opportunity in serving non‑prime and underserved customers. [36]
Impact on Customers, Employees and Communities
For Laurentian retail and SME clients
In the near term, day‑to‑day banking continues as usual. Laurentian stresses that there will be no immediate changes for customers while approvals and integration plans are worked out. [37]
Over time, however:
- Retail and SME clients will migrate to National Bank, gaining access to that institution’s mobile apps, digital platform, broader product suite and larger branch network. [38]
- Customers may see changes in account numbers, card branding, fee structures and product lineups, subject to regulatory and contractual requirements. Details are expected in future communications and a shareholder circular. [39]
For customers who hold more complex relationships — such as syndicated loans or business lines of credit — National Bank’s corporate and commercial teams will become their primary point of contact post‑closing.
For commercial clients
Commercial clients remain with the “new” Laurentian, owned by Fairstone:
- The bank will double down on commercial real estate, equipment and inventory financing, intermediary services and capital markets, leveraging Fairstone’s access to capital and national reach. [40]
This could make Laurentian a more focused competitor in Canada’s mid‑market commercial lending space, particularly against regional and niche players.
For employees
The human cost of the restructuring will be closely watched:
- Laurentian’s branches and employees are not transferring to National Bank; Laurentian will be responsible for branch closures and staffing decisions. [41]
- Affected employees will have the ability to apply for roles at National Bank via a “dedicated channel,” but there is no guarantee of one‑for‑one rehiring. [42]
- The three institutions — Laurentian, Fairstone and National — say they are committed to “transparency” and ongoing communication with staff and stakeholders as integration plans are developed. [43]
Given Laurentian’s earlier restructuring and job cuts, labour groups and Québec politicians are likely to scrutinize how many roles are ultimately lost versus redeployed.
For communities and philanthropy
Laurentian has historically played a visible role in Québec’s community investment landscape. To reassure stakeholders:
- National Bank has committed to doubling Laurentian’s corporate philanthropic program, aiming to preserve and enhance existing community initiatives in Québec. [44]
That pledge may help ease concerns about the disappearance of a mid‑sized Québec bank brand from everyday retail banking, even as the Laurentian name survives in the commercial sphere.
Regulatory and Competition Considerations
The transactions arrive at a time when concentration in Canadian banking is already under intense public and political scrutiny. The country’s Big Six banks dominate, with regional players like Laurentian providing limited competition in niche markets.
Regulators will have to weigh several factors:
- Retail banking in Québec: National Bank is already a dominant player in its home province; adding Laurentian’s retail and SME book could further consolidate market share in some segments and communities. [45]
- Alternative‑lender competition: By strengthening Fairstone and consolidating its position as the leading alternative lender (alongside Home Trust), the deal may increase competition for non‑prime consumers and certain commercial borrowers nationally. [46]
- Branch closures and access to service: Laurentian’s commitment to close all Québec branches at conversion will inevitably raise questions about physical access for older and rural customers, even if National Bank’s network and digital channels partially offset that.
The parties emphasise that the co‑ordinated structure of the deal is designed to support a “strong and competitive Canadian banking system”, but it will ultimately be up to Ottawa and regulators to decide whether the balance of competition and stability is acceptable. [47]
What Investors Should Watch Next
For Laurentian, Fairstone and National Bank stakeholders, several milestones now matter:
- Regulatory filings and circulars: Laurentian has promised detailed disclosure, including fairness opinions and full transaction terms, in a management information circular to be filed on SEDAR+. [48]
- Special shareholder meeting (Q1 2026): The key vote on Fairstone’s acquisition price and structure.
- Regulatory review timeline: Any delays or conditions imposed by OSFI, the Competition Bureau or the Finance Minister could alter the economics or timing. [49]
- Integration updates: National Bank’s integration plans for the retail/SME and syndicated loan books, and Fairstone’s roadmap for combining its commercial operations with Laurentian’s.
If everything proceeds as outlined, Laurentian Bank will cease to exist as a full‑service bank by late 2026, living on instead as a specialized commercial lender under Fairstone’s umbrella, while millions of its everyday customers become clients of National Bank. It is a transformation that will reshape not only Laurentian’s future, but also the competitive dynamics of Québec and Canadian banking for years to come.
References
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