National Bank of Canada (NA.TO), said on Tuesday it would buy Alberta-based rival Canadian Western Bank (CWB.TO), opening a new tab in a C$5 billion ($3.63 billion) deal that combines the country’s sixth and eighth-largest lenders, respectively, and gives the Quebec-based bank coast-to-coast exposure.
The deal is the latest in Canada’s highly regulated and saturated banking sector, which is dominated by six big lenders. Earlier this year, the country’s largest lender, Royal Bank of Canada RY.TO, acquired HSBC’s Canadian business.
Founded in 1984, CWB focuses on commercial banking specializing in equipment financing, trust services and wealth management, with 39 branches and 65,000 clients across Canada, concentrated in Alberta and British Columbia.
The banks said its C$37 billion loan book expands National Bank’s loan portfolio outside Quebec by 37%.
“This transaction is about growth … and supports our objectives in Western Canada and across the country,” said National Bank CEO Laurent Ferreira.
Many Canadian banks have sought growth outside the country, typically through acquisitions of regional banks south of the border. Montreal-based National Bank has focused on domestic opportunities, earning about a third of its revenue from capital markets.
The price tag of C$52.24 per share represents a 110% premium to CWB’s Tuesday close. Each CWB share will be exchanged for 0.450 of one common share of National Bank, the banks said.
The deal is expected to be completed by the end of 2025 following approval by CWB shareholders and regulators.
Caisse de depot et placement du Québec, Canada’s second-largest pension fund, said it would invest C$500 million to complete the acquisition, which would make it National Bank’s second-largest shareholder.
($1 = 1.3756 Canadian dollars)