$18-million claim against Maxium Financial sparks investigation
Canadian Western Bank (CWB) has postponed the release of its fourth-quarter earnings after a legal dispute involving its subsidiary, CWB Maxium Financial Ltd., surfaced late in its financial reporting process. The claim, which includes demands for $18 million in damages and allegations of unethical behaviour by a Maxium sales agent, has prompted an internal investigation.
The announcement sent CWB’s shares down by 5.4% on Friday, sparking speculation about the reasons behind the sudden delay as reported by The Globe and Mail. In response to investor concerns, the Edmonton-based lender clarified that the claim is unrelated to its pending acquisition by National Bank of Canada.
“We continue to expect forward progress of the transaction and expect it to close as planned and within previously announced timelines,” CWB said in a statement.
The legal dispute centres on loans provided to companies affiliated with the claimant, who has also sought general and punitive damages along with legal costs. CWB emphasized that the individual named in the claim does not have lending approval authority and that all loans underwent the bank’s established credit review process. The bank has stated that it does not foresee any material impact on its financial results as a result of the claim.
Meanwhile, National Bank continues to move forward with its $5-billion acquisition of CWB, a deal announced earlier this year that promises to expand National Bank’s footprint across Western Canada and Ontario. Regulatory reviews are ongoing, with final approval from the federal finance minister anticipated by early 2025. National Bank CEO Laurent Ferreira expressed optimism about the acquisition, describing it as a pivotal move for the bank’s growth strategy.
This delay in financial reporting adds to challenges faced by CWB in recent quarters, including elevated provisions for loan losses linked to specific clients. The bank had previously stated it did not expect further issues related to those provisions.
An updated timeline for CWB’s earnings release is expected to be announced soon, as the investigation into the claim continues.
