Canada’s Laurentian Bank says completed review of strategic options

Sept 14 (Reuters) – Canada’s Laurentian Bank (LB.TO) said on Thursday it would simplify its organizational structure to boost shareholder returns, after it failed to find a buyer during a strategic review, sending its stock down over 10%.

The country’s ninth-largest lender said ?ric Provost, currently head of commercial banking, will be taking on an expanded position as group head of personal and commercial banking. It also named S?bastien B?lair as chief administration officer.

Canadian banks are facing headwinds from a record pace of interest rate hikes and a slowing housing market, which has forced lenders to increase provisions for bad debts.

The bank’s shares have given up most of their initial gains after the strategic review was announced in July but are still up 11% so far this year. Analysts said the gains were largely from investors hoping for a potential merger deal with a larger rival.

“A disappointing end to Laurentian’s strategic review for shareholders,” KBW analyst Mike Rizvanovic said, noting that there was “little clarity” on how the current strategic plan might change moving forward.

Laurentian launched the review in July, seeking to maximize shareholder value, and had said at the time it was “exceeding” its financial targets in an increasingly challenging macroeconomic environment and market volatility.

However, later that month, a media report citing sources said Montreal-based Laurentian was struggling to find an acquirer and that Canada’s top banks – Bank of Nova Scotia (BNS.TO) and Toronto-Dominion Bank (TD.TO) – had backed out of a potential acquisition.

“The Board, with the support of the Executive Management Team, has unanimously concluded that the best path forward is… accelerated evolution of its current strategic plan with an increased focus on efficiency and simplification,” Laurentian said.

Laurentian said it considered a variety of options through the review process, including an acquisition of the whole bank and divesting certain businesses.

The bank had also laid out a three-year turnaround plan in late 2021 to streamline operations and boost profits, which it has said is on track.

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