2023-09-14 23:39:52
(Photo: 123RF)
Shares of Laurentian Bank (LB) fell more than 12% Thursday afternoon on the Toronto Stock Exchange, after the bank announced that it had completed a review of its strategic options without reaching an agreement for its sale.
The Montreal bank said Thursday that it had decided that the best path forward to generate shareholder value was an accelerated evolution of its current strategic plan, with increased attention to efficiency and simplification.
A strategic review is often seen by investors as a prelude to selling a business. However, Laurentian announced that it would work to simplify its organizational structure and focus on allocating capital and resources to its most profitable business units and specialized products.
“Having completed the review of our strategic options, we have more confidence than ever in the strong positioning of Laurentian Bank on the market and in the unique offer it offers to its clients,” affirmed the CEO of Laurentian, Rania Llewellyn, in a press release.
“As we continue to evolve our Bank, the management team and all employees will rely on our proven ability to implement our plan and deliver concrete results for our customers, our shareholders and our various stakeholders .”
Laurentian announced its strategic review in July, which sparked speculation about its possible acquisition by a third party.
The news then caused the bank’s shares to jump from around $33 to $43, but the stock has since erased much of that gain, and closed Wednesday at $35.87.
Shares plunged $4.60, or 12.8%, to $31.27 on Thursday afternoon on the Toronto Stock Exchange.
The bank explained Thursday that it had considered various options, including acquiring the entire bank, selling certain businesses, as well as accelerating its current strategic plan.
National Bank analyst Gabriel Dechaine said in a note that he expected a buyer to step in to buy the bank at a price below its book value, and explained that he had lowered his note from the bank given that this was not the case.
“Since a major catalyst has not emerged from this strategic review, we believe that (Laurentian) stock will be under pressure and that it will be difficult to attract new investors.”
Furthermore, Laurentian Bank announced that Éric Provost, currently head of business services, would now also manage personal banking services, thus becoming group head of personal and business banking services.
Sébastien Bélair will also become the bank’s head of administrative services, taking responsibility for the bank’s operations in addition to his current role as head of human resources.
Laurentian said it will share more information when it reports fourth-quarter results on Dec. 7 and will unveil a renewed strategic plan at an investor day in early 2024.
The bank implemented a three-year strategic plan that it launched at the end of 2021 to modernize its activities, in particular with the deployment of its first mobile banking application.
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