The anticipated sale of Laurentian Bank could have a major impact on Quebec’s 1,500 jobs if the buyer is a Canadian bank, a former executive at the Montreal financial institution estimates.
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“There is a risk that well-paying jobs will be lost in Quebec. “The head office isn’t what it was ten years ago, but there are several paid jobs there in finance, business and IT,” reflects the former manager, who spoke under cover of anonymity.
In his opinion, there could be a consolidation of the market, which would be at the expense of jobs. Laurentian has 3,000 nationwide.
“Desjardins or the National Bank, for example, with their current staff, are able to absorb all of Laurentian’s assets without hiring a single person. I’m not sure Quebecers want that, but there are banks in Ontario that want to grow. “Scotia, for example,” thinks the former head of state, who also believes a merger with Canadian Western Bank is a possibility.
Louis Hébert, professor of strategy at HEC Montreal, shares the fear of significant layoffs.
“The impact on jobs will depend on the type of buyer. If he sees an opportunity to consolidate his operations, there’s a good chance Laurentian’s headquarters will disappear. But there could also be a buyer who is not a bank and wants to diversify its activities,” believes Hébert.
Louis Hébert photo from the EMBA McGill-HEC Montréal website
An accepting insurer?
Laurentian Bank’s potential buyers could include insurers that manage mutual funds already sold by Canadian banks.
Analyst Gabriel Dechene from the National Bank considers the possibility of a foreign bank getting hold of these assets, which are worth US$2.6 billion, to be unlikely.
“She’s too small. What good would it do for a foreign bank not already based in Canada to buy Laurentian, whose cost is high compared to the size of its assets?” he notes.
According to Mr. Dechene, Canada’s top six banks should explore the possibility of acquiring Laurentian. However, RBC, which is already in the process of completing a deal to acquire HSBC, and TD, which is eyeing the American market, are less likely to act, he says.
Despite recent performance improvements, Laurentian offers limited prospects for profitability, according to Professor Louis Hébert, as the company is subject to increasingly strict regulations and its compliance and technology obligations are the same as for large banks, but without the same financial resources given the size of its assets.
asset in the commercial sector
Still, Laurentian has an edge for a buyer, and that lies in its commercial sector activities, where Canada’s big banks still have room for growth.
“They don’t have 95% of the market like private individuals, they have 60 to 70%.” “The jewel of Laurentian is in the commercial,” says the former executive, who spoke on condition of anonymity, adding that the dissolution of the unions in the 2021 will increase the interest of potential buyers.
The Caisse de Depot et Placement du Quebec, the only Quebec shareholder among the ten largest of Laurentian Bank, has remained silent.
“Because this is a public company, we will not be making specific comments, but we will be closely monitoring this process,” spokeswoman Kate Monfette said.
Laurentian shares traded at $46.06 today, up 37% from the previous day.
Laurentian, the country’s seventh-largest bank, has assets of around $51 billion.
In collaboration with Sylvain Larocque
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