Bank of Montreal says it will raise about $3.15 billion in a public offering and a concurrent private placement of shares after the federal banking regulator announced plans to increase the amount of capital major banks need to have on hand.
The Office of the Superintendent for Financial Institutions said last week that the domestic stability buffer will go up by half a percentage point to three per cent as of Feb. 1, 2023. It also increased the possible range of future adjustments to between zero and four per cent, rather than the previous top end of 2.5 per cent.
BMO says it plans to use the money raised to align the its capital position with the increased regulatory requirements and for general corporate purposes.
Under the plan, the bank has agreed to issue and sell 11,805,000 common shares in a public offering at a price of $118.60 per share for total gross proceeds of approximately $1.40 billion.
The offering is being underwritten on a bought-deal basis by a syndicate of underwriters led by BMO Capital Markets. The underwriters also have an option for up to an additional 1,770,750 common shares at the public offering price.
BMO has also has agreed to issue and sell 14,755,477 shares at the same price to a group of investors including Caisse de dépôt et placement du Québec, OMERS, Alberta Investment Management Corp., Healthcare of Ontario Pension Plan, Public Sector Pension Investment Board, Canada Pension Plan Investment Board and BNP Paribas SA for total gross proceeds of about $1.75 billion.
This report by The Canadian Press was first published Dec. 13, 2022.
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