BMO · Bank of Montreal

BMO Financial Group has entered a definitive agreement to divest its Transportation Finance and Vendor Finance businesses to Stonepeak, a New York-based infrastructure investment firm with US$88 billion in assets under management. These businesses, which provide specialized financing for trucks, trailers, and equipment through dealer and OEM networks, represent a C$14.5 billion combined loan and lease portfolio as of March 31, 2026. The transaction supports BMO's strategy to enhance capital efficiency, elevate returns, and refocus on core markets with strong client relationships and growth potential. Aron Levine, BMO U.S. President, emphasized reallocating capital to high-value areas while maintaining exposure via a 19.9% equity stake, allowing participation in future income through a more efficient structure. Stonepeak's Will Schleier highlighted the businesses' premier status and plans to expand the customer base leveraging their infrastructure expertise. Financially, the deal triggers a C$0.9 billion net after-tax charge in Q3 2026, mainly goodwill impairment in the Corporate Services segment, treated as an adjusting item. Pro forma impacts include a 28 basis point CET1 ratio boost from risk-weighted asset reduction and ROE accretion, without materially affecting run-rate earnings. Closure is targeted for Q4 fiscal 2026 pending approvals, with BMO Capital Markets, BofA Securities, and law firms advising. This move positions the businesses for growth under Stonepeak while optimizing BMO's balance sheet for strategic investments.