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 Laurentian Bank is conducting a strategic review that analysts say could lead to a sale, potentially solidifying a new trend of consolidation in Canada’s banking sector. News of the possible sale of the Montreal-based company, Canada’s eighth-largest bank by total assets, comes after two other recent deals for smaller financial players: the sale of mortgage provider Home Capital and, more significantly, RBC’s proposal to buy HSBC Canada for $13.5 billion. A merger between two of Canada’s largest banks themselves — RBC, BMO, TD Bank, CIBC, Scotiabank and National Bank — has essentially been off the table for the last 25 years. In 1998, then-Finance Minister Paul Martin blocked a pair of proposed mega-deals, one between RBC and BMO and the other between TD and CIBC.But the RBC/HSBC merger in particular, which was announced last November and is still awaiting regulatory approvals, could have been a factor in spurring interest in Laurentian and prompting its strategic review. “We believe the Canadian bank consolidation has been opened with Royal’s pending acquisition of HSBC Canada,” bank analysts from Barclays wrote in a research note Wednesday.Laurentian said in a statement late Tuesday that it is “conducting a review of strategic options to maximize shareholder and stakeholder value.” Earlier, the Globe and Mail reported that Laurentian had received a bid from an undisclosed rival. Both the Globe and La Presse reported that the bank hired JPMorgan to advise on the process. The bank’s shares spiked by almost 27 per cent on Wednesday to close at $42.46. Analysts from Canaccord Genuity estimated the bank could be acquired for a price of between $53 and $59 per share. “We believe this could result in a potential sale of the entire company,” the Canaccord analysts wrote of the strategic review. “We believe the most likely suitor would be one of the big six banks.”In a January report, the Barclays analysts said that revisiting one of the 1998 mergers or even a different combination of the Big Six “is likely a non-starter,” but they added that, “combining some of the smaller players could alleviate some scale issues while also potentially fostering higher competition, despite a reduction in the number of players.”Smith Financial, a family holding company of financier Stephen Smith, said in November it planned to acquire the remainder of the Home Capital shares it didn’t already own for a share price that valued the mortgage provider at $1.7 billion.RBC announced its acquisition of HSBC Canada, the country’s seventh-largest bank by assets, less than a week later. Canadian Western Bank could be another potential takeover candidate, and its shares were up almost four per cent on Wednesday. As for a buyer for Laurentian, the Canaccord analysts suggested RBC would be the least likely option, as it is consumed with the regulatory approval process for HSBC. Scotia and BMO “would each be top contenders” they said, adding that TD also has ample capital (it called off a $13.4-billion (U.S.) deal to acquire U.S. bank First Horizon Corp. in May). National Bank is similarly well capitalized, the Canaccord analysts said, but could run into problems getting Competition Bureau approval because, like Laurentian, it also has significant operations in Quebec. Laurentian’s strategic review comes two and a half years after Rania Llewellyn took over as CEO and launched an ambitious turnaround that saw the bank undergo a major tech overhaul. That included the long-overdue creation of a mobile banking app, enabling tap payments on debit cards and streamlining the process to open an online bank account.The bank, which employs about 3,000 people and has operations heavily concentrated in Quebec, has exceeded financial targets it set as part of a three-year plan it kicked off in late 2021. As of late June, before the strategic review became public, its share price had increased by more than 20 per cent since Llewellyn took over as CEO in 2020. Llewellyn, who was an executive at Scotiabank before joining Laurentian, told the Star in a recent interview that she was drawn to the challenge of the CEO’s job, where she has also put a renewed focus on hiring employees from diverse backgrounds.“I’ve always been attracted to transformational agendas and problem solving,” she said. “And I saw this as my chance to build the bank I had always wanted to work for.”With files from Bloomberg 

Laurentian Bank is conducting a strategic review that analysts say could lead to a sale, potentially solidifying a new trend of consolidation in Canada’s banking sector.

News of the possible sale of the Montreal-based company, Canada’s eighth-largest bank by total assets, comes after two other recent deals for smaller financial players: the sale of mortgage provider Home Capital and, more significantly, RBC’s proposal to buy HSBC Canada for $13.5 billion.

A merger between two of Canada’s largest banks themselves — RBC, BMO, TD Bank, CIBC, Scotiabank and National Bank — has essentially been off the table for the last 25 years.

In 1998, then-Finance Minister Paul Martin blocked a pair of proposed mega-deals, one between RBC and BMO and the other between TD and CIBC.

But the RBC/HSBC merger in particular, which was announced last November and is still awaiting regulatory approvals, could have been a factor in spurring interest in Laurentian and prompting its strategic review.

“We believe the Canadian bank consolidation has been opened with Royal’s pending acquisition of HSBC Canada,” bank analysts from Barclays wrote in a research note Wednesday.

Laurentian said in a statement late Tuesday that it is “conducting a review of strategic options to maximize shareholder and stakeholder value.”

Earlier, the Globe and Mail reported that Laurentian had received a bid from an undisclosed rival. Both the Globe and La Presse reported that the bank hired JPMorgan to advise on the process.

The bank’s shares spiked by almost 27 per cent on Wednesday to close at $42.46. Analysts from Canaccord Genuity estimated the bank could be acquired for a price of between $53 and $59 per share.

“We believe this could result in a potential sale of the entire company,” the Canaccord analysts wrote of the strategic review. “We believe the most likely suitor would be one of the big six banks.”

In a January report, the Barclays analysts said that revisiting one of the 1998 mergers or even a different combination of the Big Six “is likely a non-starter,” but they added that, “combining some of the smaller players could alleviate some scale issues while also potentially fostering higher competition, despite a reduction in the number of players.”

Smith Financial, a family holding company of financier Stephen Smith, said in November it planned to acquire the remainder of the Home Capital shares it didn’t already own for a share price that valued the mortgage provider at $1.7 billion.

RBC announced its acquisition of HSBC Canada, the country’s seventh-largest bank by assets, less than a week later.

Canadian Western Bank could be another potential takeover candidate, and its shares were up almost four per cent on Wednesday.

As for a buyer for Laurentian, the Canaccord analysts suggested RBC would be the least likely option, as it is consumed with the regulatory approval process for HSBC.

Scotia and BMO “would each be top contenders” they said, adding that TD also has ample capital (it called off a $13.4-billion (U.S.) deal to acquire U.S. bank First Horizon Corp. in May). National Bank is similarly well capitalized, the Canaccord analysts said, but could run into problems getting Competition Bureau approval because, like Laurentian, it also has significant operations in Quebec.

Laurentian’s strategic review comes two and a half years after Rania Llewellyn took over as CEO and launched an ambitious turnaround that saw the bank undergo a major tech overhaul. That included the long-overdue creation of a mobile banking app, enabling tap payments on debit cards and streamlining the process to open an online bank account.

The bank, which employs about 3,000 people and has operations heavily concentrated in Quebec, has exceeded financial targets it set as part of a three-year plan it kicked off in late 2021. As of late June, before the strategic review became public, its share price had increased by more than 20 per cent since Llewellyn took over as CEO in 2020.

Llewellyn, who was an executive at Scotiabank before joining Laurentian, told the Star in a recent interview that she was drawn to the challenge of the CEO’s job, where she has also put a renewed focus on hiring employees from diverse backgrounds.

“I’ve always been attracted to transformational agendas and problem solving,” she said. “And I saw this as my chance to build the bank I had always wanted to work for.”

With files from Bloomberg