EQ Bank sells equipment financing unit to Desjardins

Equitable Bank EQB-T has struck a deal to sell its provider of commercial equipment leasing and financing arm as the lender prepares to pivot its growth strategy.

EQB Inc., the parent company of Equitable, said Thursday it plans to sell Bennington Financial Corp. to Desjardins Group. Canada’s seventh-largest lender has been revamping its strategy ahead of its investor day scheduled for December.

Ontario-based Bennington provides small and medium-sized businesses with equipment leasing through a network of brokers. As of July, its portfolio included about $1.1-billion in lease receivables.

EQB did not disclose the value of the deal, and expects the transaction to close in the first half of 2027. The bank said Bennington’s contribution to the bank’s earnings were not material.

The deal allows EQB to reallocate capital and resources to its central growth priorities, EQB chief executive officer Chadwick Westlake said in a statement.

In recent years, EQB has been grappling with elevated provisions for credit losses – money banks set aside to cover potential loan defaults – and has lagged peers in earnings growth. But some analysts have been bullish on the bank’s ability to recover its performance, and investors are waiting for details on how EQB will build on its acquisition of PC Financial from Loblaw Cos. Ltd.

Desjardins will acquire 100 per cent of Bennington shares at a discounted price of about 8 per cent of lease receivables.

EQB purchased the company in 2019 in a bid to diversify its business. At the time, Bennington had about $400-million of leases overseen by a team of 125 staff.

The sale removes one of the major drivers of EQB’s higher credit costs from the equipment leasing portfolio, Jefferies analyst John Aiken said in a note to clients.

“Removing this will allow investors to focus on the strategic acquisition of PC Financial and its potential growth moving forward,” Mr. Aiken said.