Laurentian Bank of Canada ended its strategic review on Thursday, having found no buyer for the company or its assets. The bank had embarked on this review in July, sparking speculation about a potential acquisition. Despite the unsuccessful search for a buyer, Laurentian remains confident in its market position and unique customer offerings.
Following the conclusion of the review, Laurentian announced changes to its executive team. Éric Provost will take over as Group Head of Personal & Commercial Banking, while Sébastien Bélair is set to become the Chief Administrative Officer. The bank plans to provide further updates during its fourth-quarter earnings call in early December, with a new strategic plan expected in early 2024.
The bank's shares took a hit following the announcement, falling as much as 12% - marking their biggest drop in three years. Over the last five years, Laurentian's shares have significantly underperformed compared to the S&P/TSX Composite banks index, with a decrease of about one per cent versus a 33 per cent increase in the index.
Despite this setback, Scotiabank analyst Meny Grauman viewed the outcome of the strategic review as neutral. He suggested that the lack of a buyer was largely anticipated and already factored into Laurentian's share price. Grauman noted that the shares are trading around 0.6x current book value, similar to their valuation before news broke about potential sale explorations in July.
Laurentian's future plans include simplifying its organizational structure and focusing resources on its most profitable businesses and specialized products. The bank has been implementing a three-year strategic plan since late 2021 to modernize operations, which includes launching its first mobile banking app.
In her statement on Thursday, Laurentian's president and chief executive officer Rania Llewellyn emphasized the bank's commitment to evolving and delivering meaningful results for its customers, shareholders, and stakeholders. She stated that the bank's executive management team and all employees would continue to build on their proven track record of executing against their plan.
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