(Bloomberg) -- Laurentian Bank of Canada is in talks with asset managers including private credit firms to fund around $1 billion of assets for its equipment finance provider, Northpoint Commercial Finance, according to people with knowledge of the matter.
The Montreal-based lender is exploring partnerships with funds, including in the form of a so-called forward flow agreement, where a buyer agrees to purchase loans before they have been originated and guarantees financing for them, the people said. Conversations are ongoing and no final decision has been made, said the people, who asked to not be identified as the details are private.
“Laurentian Bank is always exploring partnership opportunities that could enhance its growth and profitability,” a spokesperson said in an e-mailed statement. “Northpoint Commercial Finance is an important component of our specialized Commercial Banking strategy, as stated in our Strategic plan, and we strongly believe in its growth potential.”
Lenders globally are increasingly seeking to share risk in their loan books, while buy-side firms are looking for opportunities to invest. Banks may do so by selling loans or striking partnerships for some of their assets. In Europe, Banco Santander SA has been at the forefront of this shift as it looks to move toward a “capital-light” model. Barclays Plc also came up with a solution for its US credit card business by doing a deal with Blackstone Inc.
Laurentian Bank, Canada’s ninth-largest bank by market value, conducted a strategic review last year but failed to find a buyer. It struck a deal in April to sell C$2 billion ($1.4 billion) of assets under administration to iA Financial Corp. to simplify its business.
Northpoint offers financing to dealers of boats, all-terrain vehicles, and recreational vehicles to help them finance their inventories, according to its website. Laurentian Bank agreed to acquire the business in 2017.
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