National Bank

Former National Bank of Canada executives say the decision to purchase Canadian Western Bank just makes sense.

“This is a great lift for National and it’s a great new partner for CWB,” said John Cucchiella, president of SMEx Advisory and partner at First North Consulting in Toronto. “Culturally, they’re aligned.”

“I’m super bullish on [the acquisition],” said Charlie Spiring, founder and chair of Wellington-Altus Private Wealth Inc. in Winnipeg.

Spiring, who also founded Winnipeg-based Wellington West Holdings Inc., sold that firm to National Bank Financial Ltd. in 2011. He was vice-chair of NBF’s executive committee from 2011 to 2016.

“I’m still one of [National Bank’s] largest individual shareholders, so I do pay attention to how the stock’s performing and where they’re going,” he said. “When I was on the board back about a decade ago, we looked at this transaction then. I was a big fan.”

If approved, the deal would expand National Bank’s reach outside its Quebec stronghold, as CWB has 39 branches in Western Canada and Ontario. Cucchiella also praised CWB’s commercial business.

And on the wealth management side, National Bank “picks up a wealth management division that can dovetail very nicely into National Bank Financial,” he said.

Cucchiella, who was a senior vice-president with National Bank from 2016 to 2018, also believes both organizations have an entrepreneurial culture. As a result, CWB’s financial advisors “will find this is going to be a great home,” he said.

As of April 30, CWB’s wealth management division had $11.2 billion in assets under supervision: $8.8 billion in assets under management and administration, and $2.4 billion in assets under advisory (primarily related to its Indigenous Services business). That compared to $10.0 billion in assets under supervision on Oct. 31, 2023.

Both Cucchiella and Spiring stressed the importance of communicating with staff in the coming months.

“It’s a good deal on paper and makes brilliant sense in the medium and long term,” Spiring said. “But you’ve got to get the culture and integration right. So don’t underestimate that.”

National Bank of Canada declined to comment.

Implications for NBIN

Consolidation in the industry usually means trouble for the little guy. But this tie-up could actually support smaller financial advisory firms.

Wellington-Altus uses National Bank Independent Network (NBIN) for back-office, custody and trade execution services, and Spiring said he’s been assured that NBIN remains a priority for National Bank.

“CWB brings a lot to the table on technology,” Spiring said. “I see CWB having the opportunity to add value to National Bank’s already robust offer.”

Jared Rabinowitz, executive and founding partner with Quintessence Wealth in Toronto, also believes the CWB acquisition will be positive for NBIN customers.

Rabinowitz said for a boutique portfolio management firm like his, having a big bank as a custodian is reassuring to clients. “However, when we get into Western Canada, the brand recognition of National Bank is nowhere near [that of] the Big Five,” he said. “Although CWB is not a very big bank, they do have much more recognition in Alberta and B.C., so that’s beneficial for us.”

Another benefit is on the lending front.

“Cash-flow lending is really essential to the growth of the space we’re in,” Rabinowitz said, referring to independent firms. “Most banks [do] asset-backed lending; they don’t understand cash-flow lending.” Asset-backed lending considers a borrower’s balance sheet, while cash-flow lending considers current and future revenue.

CWB Maxium Financial is one of a few lenders that do cash-flow lending to boutique wealth management firms, Rabinowitz said, with another example being Newmarket, Ont.–based Care Lending Group.

Rolling CWB Maxium into National Bank “is going to provide some additional synergies, a bigger balance sheet and maybe more motivation, because [that lending] does directly benefit the growth at NBIN,” he suggested — the stronger the independent space, the better for NBIN.

While acquisitions are an opportunity for an organization to revisit its offerings, Rabinowitz said he’s not particularly worried about National Bank reducing CWB’s cash-flow lending operations. He cited NBIN as a differentiator for National Bank among the Big Six, as well as the growth of independent firms such as Quintessence and Wellington-Altus.

“It really does make sense for [National] to double down on supporting that type of growth,” Rabinowitz said.

“It’s business as usual at CWB, now until the necessary CWB shareholder and regulatory approvals are confirmed and this transaction closes, which we expect to take until the end of 2025,” the bank said in a statement on Maxium’s website.