Toronto-based B2B Bank, a subsidiary of Montreal-based Laurentian Bank of Canada, has acquired a $603-million investment loan portfolio from Toronto-Dominion Bank (TD) in a deal that boosts the size of B2B Bank's investment lending book and, ultimately, its position as a third-party provider of banking products to independent financial advisors.
"We believe in investment lending. We believe it can be a powerful wealth-building tool for the right clients," says Anne Wright, vice president of business development with B2B Bank. "We've proven our dedication to the advisor community by consistently staying in the market even through the financial crisis [of 2008] and continuing to build and strengthen our portfolio."
B2B Bank offers investment and RRSP loans, mortgages, deposits and other banking and investment services to financial advisors, mortgage and deposit brokers, mutual fund and insurance firms, and dealerships and brokerages.
With the transaction for TD's Investment Lending Services loan portfolio, B2B Bank now has a portfolio of investment loans totalling almost $5 billion, according to the bank.
"We are hoping to bring new advisors into the client base, and also welcome the TD clients," Wright says.
B2B Bank says it will add 5,000 new end customers with the acquisition. The account conversion is expected to take place this autumn. Until then, TD will continue to perform account administration, with both banks saying they are committed to ensuring a smooth transfer of business.
B2B Bank's leadership has long stated that it's interested in adding to the investment loan portfolio both organically and by acquisition, says Robert Sedran, a banking analyst and managing director with CIBC World Markets in Toronto.
"This should be a positive transaction [for B2B Bank]," says Sedran. "It builds scale and it builds a business for them."
Characterizing the deal as a tuck-in for B2B Bank, Sedran says that although the deal isn't large, it fits both B2B Bank's and TD's strategic goals.
"From TD's perspective, it's not a terribly large loan book and I think it's more meaningful [as a portfolio of loans] to B2B Bank than it was to TD," Sedran says. "And for TD, it makes sense to clean up their [investment loan] book a little as well."
B2B will look for ways to leverage the acquisition to increase business organically.
"One of things that we have found, through our acquisitions is that sometimes an advisor dealt with us for just one product," Wright says. "Maybe they did RRSP loans or GICs, and sometimes they don't know our full product lineup. One of our key goals this year is to make sure advisors know our complete book of business, including our investment accounts and other services that we offer."
However, B2B Bank might not be done with acquisitions, Wright acknowledges: "I suppose if there are other things down the road that fit with our business, like this one did at TD, we would look at it."
Last year, B2B Bank expanded its lending program for mortgage brokers, adding alternative and expanded mortgage — for clients with a "wide range of employment and income profiles" — to its existing insured and conventional mortgage products.
In 2012, B2B Bank acquired AGF Trust; in 2011, it acquired the MRS Group of Cos., including MRS Trust.
B2B Bank has $12 billion in consumer deposits, $9 billion in loans and mortgages and close to $33 billion in assets under administration, according to the bank.