The Big Six are well positioned for further growth – but don’t expect a mergers-and-acquisition boom next year
A pair of high-profile deals in Canada’s banking space arrived just before the end of the year, announced within days of each other and rounding off 2025 with a bang.
On December 2, Fairstone Bank of Canada announced that it was purchasing all outstanding common shares of Laurentian Bank, merging its commercial operations as National Bank acquired Laurentian’s retail, SME and syndicated loan portfolios.
Then EQB, parent company of Equitable Bank, inked an $800 million deal to purchase President’s Choice (PC) Bank from Loblaw Companies, a move seen as a big foray into Canada’s credit card market.
EQB announced a deal to purchase President’s Choice (PC) Bank from Loblaw Companies on Tuesday, an agreement the company says will boost its customer base by millions and mark a significant step into Canada’s credit-card market.https://t.co/zmBjT9ibcq
— Canadian Mortgage Professional Magazine (@CMPmagazine) December 5, 2025
Those announcements sparked speculation that more purchases, mergers and acquisitions by Canada’s banking giants could be ahead in 2026.
But that’s by no means a given – especially because there’s increasingly less room for Canadian banks to expand nationally through M&A activity, according to Carl De Souza (pictured top), senior vice president, sector lead, North American financial institution ratings at Morningstar DBRS.
He told Canadian Mortgage Professional that a cramped space for the nation’s lending giants meant blockbuster deals within Canada could be few and far between looking ahead.
‘The Canadian market is so small’
“It’s hard to say if it continues next year because the Canadian market is so small,” De Souza said. “There’s not much further merger and acquisition space in 2026 in the Canadian sense. I don’t know where it would come from. I think to most, the PC Financial acquisition was somewhat unexpected.
“So there could always be something like that. The Big Six might do some tuck-in acquisitions, but I wouldn’t say anything of a material nature.”
Still, the Equitable and Fairstone moves are notable, reflecting the need for major lenders to scale and compete. That’s easier said than done, particularly because the Big Six (TD, BMO, RBC, CIBC, Scotiabank, and National Bank) are so dominant.
They’re also part of a continuing trend this year. “You’re seeing a lot of merger activity in the credit unions because it’s obvious they need more scale to be able to undertake technology investments and things like that,” De Souza said.
“And in the medium-sized space, what you’re seeing here with these two transactions – the Fairstone acquisition, and the Equitable one – is the opportunity not only to gain scale, but to get more diverse product-business mix, a depth of products and things like that.”
The Big Six have remained focused this year on organic growth and share buybacks. Healthy excess capital among those lenders means more acquisitions next year aren’t necessarily out of the question, De Souza said – but the issue is finding a deal that meets their criteria and doesn’t result in an overpay.
And that activity looks most likely to be focused south of the border. In September, RBC chief executive officer Dave McKay hinted Canada’s biggest bank could expand its US operations by targeting “highly coveted” wealth-management companies, but said it wouldn’t approach that search with an open chequebook. “They don’t want to overpay for that,” De Souza said.
Big Six well positioned to expand market share, but caution prevails
Each of the top six banks also posted healthy fourth-quarter financials at the end of last month, seeing profits climb even despite ongoing economic volatility.
That continuing strength suggests they’d be well placed to strike further deals in the US if the opportunity arrived, but De Souza isn’t convinced 2026 will be the year for huge expansion among the Big Six.
“They’re all well capitalized and they’re all very big banks,” he said. “So if the opportunity presented itself, I think they’re open to it. But it would really have to be the right situation at the right price and when you look at the market, I’m not sure that’s there right now.
“And they’re all busy with other things – focused on organic growth and profitability, and they’re all under these share buyback swings right now to deploy some excess capital. So that’s where they see a bigger bang for their buck right now.”
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