2 days ago
BMO's transportation group, major lender to trucking, may be for sale: report
The transportation group of BMO, one of the largest lenders to the trucking industry, may be up for sale.
According to a Wednesday report from Bloomberg, BMO (NYSE: BMO), the former Bank of Montreal, is 'exploring' a sale of the transportation finance business. Bloomberg, quoting 'people familiar with the matter,' said the group could bring a sales price of about $1 billion.
If the deal was concluded in the next few months–if there is a deal–it would mark an almost even decade that BMO had the business. It bought the unit from GE Finance in late 2015.
The quarterly earnings at BMO provide granular data on various performance metrics of its divisions, including transportation. Figures on writeoffs, allowances, provisions and impaired loans, as well as the size of the transportation unit's total book of business, can be used to draw some inference about the state of the industry.
For example, gross impaired loans in the second quarter were $503 million. In the strong freight market of 2022, the quarterly figure for gross impaired loans were generally between $70 and $80 million, reflecting the radically different conditions for trucking.
With a sale, that data presumably will no longer be available unless the new owner publishes it each quarter.
Approximately 90% of BMO's transportation book of business is believed to be trucking.
BMO's view of the importance of that sector can be seen at numerous trucking trade shows. The bank often secures the first spot at the various conferences' trade shows, impossible to miss when attendees walk through the door.
An email sent to BMO seeking comment had not been returned at publication time. The bank also declined comment to Bloomberg.
In its latest quarterly report for the second quarter of fiscal 2025, released in late May, BMO reported gross loans and acceptances in its transportation unit of over CA$14 billion (U.S. $10.1 billion). That was down from approximately $14.9 billion in the prior quarter. The highest book of business reported by the company's transportation sector was approximately $15.6 billion in the fourth quarter of fiscal 2023.
Of the various sectors broken out by BMO, that bank of business for transportation is well down the chart compared to other lending books at BMO. The largest in the second quarter was commercial real estate at $76.9 billion.
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