Laurentian Bank looks at real estate financing

MONTREAL — Laurentian Bank (TSX:LB) is looking to grow by diversifying its real estate financing business outside its home base of Quebec, with possible expansion to Saskatchewan.

MONTREAL — Laurentian Bank (TSX:LB) is looking to grow by diversifying its real estate financing business outside its home base of Quebec, with possible expansion to Saskatchewan.

“There may be new offices in specific cities. We’re looking at Saskatchewan for the real estate (financing),” president and CEO Rejean Robitaille said Tuesday.

In 2009, Laurentian had 20 per cent growth in its financing of smaller residential and commercial construction projects despite the economic downturn, Robitaille said.

“Our real estate financing division that (is) present in major Canadian cities also allows (us) to go and look for growth that is quite significant,” Robitaille said at a news conference after the bank’s annual shareholders’ meeting.

“So, this gives us better diversification.”

The bank has 40 per cent of its real estate loans outside Quebec, he said. It’s not involved in condo or high-rise construction.

Real estate financing and commercial loans represent about 30 per cent of the bank’s profitability.

Laurentian was able to pick up slack and offer real estate financing when other competitors exited the field due to economic conditions last year, Robitaille said.

In Quebec, Laurentian not only competes with the homegrown National Bank of Canada (TSX:NA) and credit union Desjardins, but also with the other major banks.

Robitaille said there’s also plenty of room for the bank to increase its credit card growth in Quebec, noting its market penetration is more than 30 per cent while its competitors claim more than 50 per cent of the market.

The bank also wants to increase its number of small and medium-sized business clients and sell more securities and financial products.

“So we are trying to have a better diversification of products by having those growth engines, but also in terms of diversification across Canada,” Robitaille said, adding that it’s important for the bank to have “specific niches” so it can focus on its strengths.

He noted that Laurentian’s wholly owned subsidiary B2B Trust is also an important growth engine outside Quebec. It works with independent financial advisers across Canada to sell products such as mutual funds and high interest investment accounts.

Shareholders at the meeting voted almost unanimously in favour of the way Laurentian’s top executives are paid in a non-binding “say on pay” vote. The tally was 99.1 per cent in favour of the bank’s compensation proposals.

This is the third group of Canadian bank shareholders to vote in favour of such a scheme, which gives them the means to voice approval or disapproval of how a bank rewards its top people.

All of Canada’s big banks have agreed to carry out non-binding votes to provide guidance to their boards of directors, who will continue to make the final decision on how much executives get paid.

So far, two have held votes — CIBC (TSX:CM) and Royal Bank (TSX:RY) — with both gaining approval for proposed compensation packages. The rest will hold similar votes at their annual meetings, as will some major financial firms.

“Compensation management is an art that is extremely difficult to master,” Laurentian board chairman Denis Desautels told shareholders.

“However, we are convinced that the programs presently in place meet both shareholder objectives and those of the bank and its executive officers.”

Laurentian’s shares closed up five cents at $43.80 on Tuesday in trading on the Toronto Stock Exchange.