National Bank of Canada received the federal competition watchdog’s blessing for its proposed $5-billion takeover of Canadian Western Bank on Thursday, a key regulatory approval for the Montreal-based bank’s domestic expansion strategy.
The Competition Bureau of Canada signed off on the second planned takeover of one of the country’s 10 largest banks in the past year. In March, Royal Bank of Canada purchased HSBC Bank Canada for $13.5-billion.
In June, National Bank announced plans to scale up across the country by acquiring Edmonton-based Canadian Western, the country’s eighth-largest lender, with a $37-billion loan portfolio and 39 branches in Western Canada and Ontario. National Bank is the country’s sixth-largest bank, with $454-billion in assets.
National Bank pledged it will maintain Canadian Western’s branch network and Alberta executive team when it announced the takeover.
“We are pleased that the Competition Bureau has concluded its review of this transaction, and to have its approval to bring together these two great banks which have a complementary footprint in personal and commercial banking,” said Laurent Ferreira, chief executive at National Bank, in a news release on Thursday.
The takeover still requires approval from the federal Office of the Superintendent of Financial Institutions (OSFI) and the Minister of Finance. The two banks expect to close the transaction by the end of 2025.
If the takeover is approved by OSFI and the Finance Minister, National Bank estimates it can cut its annual costs by approximately $270-million. However, Mr. Ferreira has declined analysts’ requests to detail the bank’s integration strategy and potential synergies.
RBC scaled back its cost-cutting plans to win government approval for the takeover of Vancouver-based HSBC Canada. Toronto-based RBC pledged it would build a global banking hub in Vancouver, with 1,000 employees, and a customer centre in Winnipeg, as well as commit $7-billion to financing affordable housing developments.
Last year, federal Conservative Leader Pierre Poilievre called for the federal government to reject RBC’s takeover of HSBC Bank Canada. He said that deal would reduce banking competition at a time when homeowners are struggling with high borrowing costs.
National Bank is buying Canadian Western with an all-stock offer that valued the Alberta-based bank at a 110-per-cent premium to its share price prior to announcement of the deal in June.
Earlier this month, Canadian Western held a shareholder vote on the takeover. The offer received approval from 99.8 per cent of investors, easily exceeding the required 66.6 per cent threshold for acceptance.