A National Bank sign is seen Monday, May 30, 2016 in Montreal. THE CANADIAN PRESS/Paul Chiasson
MONTREAL - National Bank of Canada has agreed to acquire Canadian Western Bank in an all-share deal valued at around $5 billion. This move aims to bolster National Bank's presence in Alberta and British Columbia, areas currently underserved by the Quebec-based bank.
National Bank's CEO, Laurent Ferreira, highlighted the strategic significance of the acquisition, emphasizing its role in expanding the bank's footprint across Canada.
The acquisition follows RBC's recent purchase of HSBC Canada for $13.5 billion, sparking concerns about market concentration. National Bank, currently the sixth-largest bank in Canada, views this acquisition as an opportunity to enhance its competitiveness nationally.
Canadian Western Bank, with approximately 65,000 clients and 39 branches, primarily serves clients in Alberta and British Columbia. Through this deal, National Bank aims to increase its lending portfolio by 37%, particularly in commercial-focused loans.
Ferreira outlined plans to leverage Canadian Western Bank's expertise and expand full-service offerings, including digital capabilities and wealth management services, while emphasizing minimal overlap between the two banks' services.
Chris Fowler, CEO of Canadian Western Bank, expressed confidence in the merger's ability to create value for stakeholders.
Under the terms of the agreement, each Canadian Western Bank share will be exchanged for 0.45 National Bank common shares, valuing each Canadian Western Bank share at $52.24, a 110% premium to its Tuesday closing price.
National Bank intends to retain Canadian Western Bank's headquarters and appoint two of its nominees to National's board of directors. The bank anticipates approximately $400 million in acquisition costs and aims to achieve $270 million in annual cost savings within three years.
To finance the deal, National Bank secured a $500 million investment from CDPQ, making the Quebec pension fund the second-largest shareholder of National Bank.
The acquisition is subject to regulatory approval and requires the support of two-thirds of Canadian Western Bank's shareholders, with a meeting scheduled for September. The transaction is expected to close by the end of next year.
