BMO Announces Strategic Sale of Transportation and Vendor Finance Businesses

• Supports BMO’s strategy to elevate returns and accelerate growth; transaction accretive to capital ratios and ROE

• Positions these premier businesses for continued growth in an efficient capital structure

• BMO to invest in a 19.9% equity interest, enabling continued participation in the businesses’ long-term value creation

BMO Financial Group announced the signing of a definitive agreement with Stonepeak for the sale of BMO’s Transportation Finance and Vendor Finance businesses, including related loan portfolios in the United States and Canada.

The transaction will advance BMO’s strategic priorities by improving capital efficiency and sharpening its focus on core markets where the bank has deep client relationships and attractive long-term growth opportunities.

“This transaction is consistent with BMO’s focus on delivering sustained profitable growth, and enables us to invest in areas that deliver the full power of BMO to our clients,” said Aron Levine, President, BMO U.S. “We’re allocating capital to areas with strong potential for long-term value creation while obtaining an equity interest in future income of the transportation and vendor finance businesses through a more capital efficient structure. Following the transition, Stonepeak will continue to provide best-in-class client experiences, supported by its strong global infrastructure platform and deep expertise in transportation-focused asset leasing.”

BMO’s Transportation Finance business provides specialized financing for trucks and trailers predominantly through dealer-managed relationships, and its Vendor Finance business offers equipment financing through original equipment manufacturers and their dealer networks. The combined loan and lease portfolio in the United States and Canada totals approximately C$14.5 billion as of March 31, 2026.

Headquartered in New York, Stonepeak is a leading alternative investment firm specializing in infrastructure and real assets with approximately US$88 billion of assets under management. Stonepeak’s target sectors include transportation and logistics, digital infrastructure, energy and energy transition, and real estate.

“Building on decades of sector expertise, BMO Transportation and Vendor Finance has established itself as one of North America’s premier transportation financing platforms,” said Will Schleier, Senior Managing Director at Stonepeak. “We are excited to work closely with BMO and the outstanding leadership team in place to invest further in the business, build on its strong performance, and grow its commercial customer base while preserving the culture, reputation, and relationships that have made the business so successful to date.”

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Transaction Highlights

Under the terms of the agreement, Stonepeak will acquire the assets of BMO’s Transportation Finance and Vendor Finance businesses for cash consideration and an earnout contingent upon the business achieving specified future performance targets. BMO will use a portion of the consideration to invest an approximate 19.9% equity interest in the new entity.

For accounting purposes, the businesses will be classified as held for sale, and BMO expects to record a net after-tax charge of approximately C$0.9 billion primarily related to goodwill in the third quarter of 2026, which will be reported in the Corporate Services segment and treated as an adjusting item. This amount is subject to closing adjustments and foreign exchange rates prevailing at the date of closing.

Transaction aligns with BMO’s strategy to elevate returns

On a pro forma basis, the transaction is expected to improve the bank’s common equity Tier 1 (CET1) ratio by approximately 28 bps primarily from the reduction in risk weighted assets and be accretive to the bank’s return on equity. The transaction is not expected to have a significant impact on the bank’s future run rate earnings.

The transaction is expected to close in the fourth quarter of fiscal 2026, subject to regulatory approvals and customary closing conditions. BMO and Stonepeak will work together to ensure a smooth transition.