Selling the bank is the easy way to solve Laurentian’s strategic struggles, butif no bidder makes a compelling offer, there needs to be a backup plan
willing to pay a premium price for the country’s ninth-largest lender. As Laurentian prepares to release third-quarter financial results on Aug. 31, and potentially update investors on the review, analysts say without a deal, the bank’s growth prospects are dim.
In a recent preview of Laurentian’s results, RBC Capital Markets analyst Darko Mihelic forecast that over the next two years, the bank’s earnings per share will grow by an anemic 4 per cent annually. He predicted that through to 2025, Laurentian’s return on equity will remain at current levels of around 8.5 per cent, well below that of larger peers.
In the recent past, numerous companies have run strategic reviews, got investors all excited about a potential sale and then announced they were sticking to the status quo. In these situations, CEOs have consistently offered up some sort of sugar to help the medicine go down.
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