Nat. Bank of Canada : Fiera merges Natcan into its operations

Fiera merges Natcan into its operations

Montreal, 27 February 2012 - 

- Fiera grows to $54 billion in assets under management
- National Bank takes 35% strategic stake in Fiera
- Fiera and National Bank enter into long-term asset management agreement
- Jean-Guy Desjardins remains controlling shareholder of Fiera
- Strong support by independent Class A shareholders

MONTREAL, February 27, 2012- Fiera Sceptre Inc. ("Fiera" or the "Firm") (TSX: FSZ) and National Bank of Canada ("National Bank" or the "Bank") (TSX: NA) announced today that they have entered into a strategic alliance that will result in Fiera becoming one of the top five independent asset managers in Canada, with the scale and talent to assume a leading role in the Canadian asset management industry. The parties have signed a binding agreement (the "Agreement") under which Fiera will acquire the business of Natcan Investment Management Inc. ("Natcan") from the Bank for $309.5 million subject to reduction. The Natcan operations will then be fully integrated into Fiera's existing business. In return, the Bank, through Natcan, will receive class A subordinate voting shares (the "Class A Shares") representing 35% of the issued and outstanding shares of Fiera along with an option to increase its stake to 40%. Upon closing of the transaction, the Firm will change its name to Fiera Capital. Jean-Guy Desjardins will continue as Chairman, CEO, CIO and controlling shareholder of Fiera.

"The acquisition of the Natcan business adds to our established earnings base, brings additional research and portfolio management depth, and enhances an already strong platform, positioning us for future growth. Our goal is to quickly become a major player in the ranks of North American asset managers," said Jean-Guy Desjardins. "Fiera will have approximately $54 billion in assets under management as a result of the transaction, vaulting our firm into the ranks of the largest independent asset managers in Canada."

"We see tremendous growth potential for the Canadian asset management business. By combining Natcan's business with Fiera and by becoming a significant long-term partner with them, we help Fiera to gain the critical mass and expertise required to compete with the best asset management businesses in Canada and globally. We are confident this will be a benefit both to Fiera and to National Bank," said Louis Vachon, President and CEO of National Bank.

"The transaction fits perfectly with our plan of developing key partnerships in order to grow our reach in selected areas of our Wealth Management business. It also helps us keep focused on our own core business of growing our advice-based distribution capabilities, which is one of our strategic priorities," according to Luc Paiement, National Bank's Executive Vice President, Wealth Management.

As a founding shareholder of Fiera, Desjardins Financial Group supports Fiera's growth strategy as one of Canada's leading independent asset managers and will continue to focus on the distribution of highly performing funds to its clients across the Desjardins network.

Fiera Board of Directors and Special Committee Review
Because certain aspects of the transaction involve arrangements between Jean-Guy Desjardins and the Bank, a Special Committee of Independent Directors of the Fiera Board of Directors was established to review and evaluate the transaction and provide a recommendation to the Board.

The Special Committee is comprised of David R. Shaw (Chair), Arthur R.A. Scace and W. Ross Walker. Over the course of numerous meetings, the Special Committee considered a number of factors in connection with the transaction, received advice from its independent legal counsel and financial advisors, including a fairness opinion, and determined that the transaction was in the best interests of Fiera and unanimously recommended to the Board of Directors that it approve the transaction.

The Board of Directors of Fiera has, following consultation with its financial advisors and legal counsels, determined that the transaction is fair, from a financial point of view, to Fiera shareholders and is in the best interests of Fiera, and unanimously recommends that shareholders vote in favour of the transaction.

Under the rules of the Toronto Stock Exchange, the transaction is subject to the approval of a majority of the votes cast by the holders of Class A Shares of Fiera excluding votes attaching to the 833,333 Class A Shares indirectly held by Jean C. Monty (a director of Fiera) and the 60,000 Class A Shares held by Fiera L.P. (the limited partnership through which Jean-Guy Desjardins, Desjardins Financial Group and others indirectly hold their interest in Fiera).

In connection with the transaction, certain institutional shareholders who collectively hold approximately 6.3 million Class A Shares representing over 40% of the outstanding Class A Shares, have executed agreements to vote their shares in favour of the transaction, subject to certain rights of termination. Jean-Guy Desjardins and Fiera Capital L.P. have also executed an agreement to support the transaction, subject to certain rights of termination which survive any termination of the Agreement. Details of these agreements will be available in the management information circular.

Fiera has scheduled an annual and special meeting of shareholders for March 29, 2012 to, among other things, consider a resolution authorizing the issuance of the Class A Shares to be issued to the Bank at the closing of the transaction, along with certain other transaction-related matters (including the below-described entitlement of the Bank to acquire additional Class A Shares representing a total of 5% of the total number of issued and outstanding shares of Fiera). A management information circular outlining the details of the transaction is expected to be mailed to shareholders of Fiera on or about March 7, 2012. Class A Shareholders registered on the books of Fiera at the close of business on February 23, 2012 will be entitled to receive notice of, and vote at, such annual and special shareholders meeting.

Financial Terms of the Transaction
Under the terms of the Agreement, to acquire the Natcan business, Fiera will pay $309.5 million subject to reduction in certain circumstances, including $235 million at the closing of the transaction, and an amount of $74.5 million paid over time after closing unless certain minimum asset under management thresholds are not satisfied by the Bank and its affiliates. At closing, Fiera will issue approximately 19.71 million Class A Shares of Fiera, with the balance of the $235 million to be paid in cash.

The value of the shares issued at closing will be calculated based on the simple average of (i) the 10-day volume-weighted average price of Fiera shares prior to the announcement and (ii) the 10-day volume weighted average price prior to closing, provided that the share price for this purpose will not be less than $7.00 nor more than $9.00.

Upon completion of the transaction, the Bank, through Natcan, will hold 35% of the total outstanding shares of the Firm. National Bank will also receive options to acquire additional Class A Shares of Fiera at a market price determined on the day of exercise, equal to 2.5% of total shares outstanding at the end of September in each of 2013 and 2014. If the options are fully exercised, the Bank would own 40% of the outstanding Fiera equity. The Bank will also be entitled to protect its ownership in Fiera pursuant to anti-dilution rights.

Assets under Management ("AUM") Agreement
It is a condition to the closing of the transaction that Fiera and the Bank enter into a long-term AUM Agreement. Under its terms, the Bank will be required to pay certain amounts to Fiera in the event a specified minimum AUM ratio is not maintained. This ratio is calculated by reference to the aggregate market value of the assets managed by Fiera under investment management agreements with the Bank, and the aggregate market value of certain specified categories of investment assets under the control, direction or influence of the Bank.

These contractual arrangements, along with its shareholdings of Fiera, will provide the Bank with a strong economic incentive to maintain a significant percentage of its AUM with Fiera for at least the seven year term of the AUM Agreement (the agreement is subject to renewal for an additional three years, in accordance with its terms).

Board Representation and Voting Arrangement; Buy Sell Rights
Concurrent with the closing of the transaction, the Bank will enter into a voting arrangement agreement with Jean-Guy Desjardins, who will remain the controlling shareholder, CEO and Chief Investment Officer of Fiera. The Bank will be entitled to appoint two members to the board of directors of Fiera, chaired by Mr. Desjardins. Sylvain Brosseau will remain President and Chief Operating Officer of Fiera.

Under the voting arrangement agreement, in certain circumstances where the Bank and Jean-Guy Desjardins are unable to agree in respect of an extraordinary matter proposed to be presented to Fiera shareholders, Jean-Guy Desjardins would become entitled to require the Bank to buy 75% of his indirect interest in Fiera. In these circumstances, Desjardins Financial Group would also be required to sell up to 75% of its indirect interest in Fiera to the Bank.  All such transactions would occur at then current market values.

In addition, a principal investors agreement and related agreements will be entered by, among others, Desjardins Financial Group, the Bank and Arvestia Inc. (the corporation through which Jean-Guy Desjardins and other managers currently hold their indirect interests in Fiera). Under this agreement, and subject to certain conditions, Desjardins Financial Group will have certain rights during a 4-year period to require the Bank to buy up to 75% of its indirect interest in Fiera at stated prices which vary, depending on circumstances, between 95% and up to 115% of then current market values.

These buy sell rights and obligations will be described in detail in the management information circular to be mailed to shareholders in connection with the transaction.

Closing Timing and Conditions
The transaction, which is expected to close by April 30, 2012, is subject to the approval of a majority of the independent holders of Class A Shares, along with regulatory approvals and other customary conditions.

Compelling Benefits for Clients
"The 'power of thinking' is the cornerstone that contributed to the success of Fiera in the past and remains at the core of the Firm's fundamental values today. Our investment philosophy is based on optimal performance and intelligent innovation, combined with superior client service. This integration of Natcan into Fiera will result in more competitive and tailored multi-style investment solutions for a diversified clientele of investors," according to Jean-Guy Desjardins. "Combining the portfolio management expertise and research capabilities of Natcan and Fiera will create a powerhouse asset manager that will have the talent to create innovative products and the bench strength to successfully compete for a broad range of investment mandates."

Advisors
GMP Securities LP is acting as financial advisor to Fiera, and Osler, Hoskin & Harcourt LLP is acting as Fiera's legal advisors. Stikeman Elliott LLP is acting for Arvestia Inc. Norton Rose Canada LLP is the legal advisor to the Special Committee of the Board of Directors of Fiera. National Bank Financial is National Bank's financial advisor for the transaction and its legal advisor is McCarthy Tétrault LLP.

Financial Impact of the Transaction for National Bank
The Bank has determined that the transaction will result in it realizing a gain of approximately $177 million, or $1.09 per share, and will increase its Tier 1 Capital by approximately 20 basis points. The transaction is expected to be earnings neutral for the Bank on a recurrent basis.

Conference Call
A conference call for analysts and portfolio managers to discuss this announcement will be held on February 27, at 10:45 A.M., Eastern Time, by phone at 1-800-704-5375. Please join the call at 10:40. Media are invited to participate in the call on a listen-only basis.

Live Internet broadcast of the conference call will also be accessible at:https://cc.callinfo.com/r/1ndl49nyyscn6 .(You will be asked to register to access the presentation slides and the audio live stream of the call).

Management's comments will be available on the websites of Fiera, Natcan and the National Bank shortly after the call.

Rebroadcast of Conference Call
The conference call recording will be available until March 28, 2012 by dialing 416-626-4100 and entering access code 21581009.

About Fiera
Fiera is a leading publicly traded, independent investment firm. The Firm is one of only a handful of full service, multi-product investment firms in Canada, offering clients a proven top tier track record in equity and fixed income management as well as depth and expertise in asset allocation and alternative investments. For more information, visitwww.fierasceptre.ca.

Additional information relating to the Firm, including the Firm's annual information form, is on SEDAR atwww.sedar.com.

About Natcan
Natcan is a subsidiary of National Bank of Canada that provides asset management services to pension funds, mutual funds, insurance companies, exchange-traded funds, foundations and other institutional clients. With $25 billion in assets under managementand more than 45 investment professionalsin its Montreal and Toronto offices, Natcan offers a diversified and comprehensive range of products across all global markets and multiple investment styles. It's highly disciplined and rigorous risk-management approach focuses on fundamental analyses, an approach all of our investment managers implements with utter conviction and unrivaled integrity.For more information, visitwww.natcan.com.

About National Bank
National Bank is an integrated group that provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its clients elsewhere in the world. National Bank offers a full array of banking services, including retail, corporate and investment banking. It is an active player on international capital markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management as well as mutual fund and retirement plan management. As at October 31, 2011, National Bank has over CDN$156 billion in assets in accordance with Canadian GAAP and, together with its subsidiaries, employs more than 19,000 people. The Bank's securities are listed on the Toronto Stock Exchange (TSX: NA). For more information, visit the Bank's website atwww.nbc.ca. To access National Bank's financial literacy portal, visitwww.clearfacts.ca.

Caution Regarding Forward-Looking Information
Fiera's public communications often include oral or written forward-looking statements. Statements of this type are included in this press release and may be included in other filings with Canadian securities regulators or in other communications. Forward-looking statements may include comments with respect to Fiera's objectives, strategies to achieve those objectives, expected financial results (including those in the area of risk management), and the outlook for Fiera's businesses and for the Canadian, United States and global economies. Such statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intent," "estimate," "plan," "may increase," "may fluctuate," and similar expressions of future or conditional verbs, such as "will," "should," "would" and "could."

By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond Fiera's control, could cause actual results to differ materially from the estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the economic and financial conditions in Canada and globally; fluctuations in interest rates and currency values; liquidity; significant market volatility and interruptions; the failure of third parties to comply with their obligations to Fiera and its affiliates; the effect of changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes in tax laws; operational and reputational risks; the risk that Fiera's risk management models may not take into account all relevant factors; the accuracy and completeness of information received by Fiera; Fiera's ability to complete Natcan's acquisition and integrate the Natcan business and its other growth strategies; changes in accounting policies and methods Fiera uses to report its financial condition and the results of its operations, including uncertainties associated with critical accounting assumptions and estimates; the effect of applying future accounting changes; Fiera's ability to attract and retain key executives; technological developments; fraud by internal or external parties; consolidation in the Canadian investment management sector; competition, both from new entrants and established competitors; judicial and regulatory proceedings; acts of God, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments, including terrorist acts and war on terrorism; the effects of disease or illness on local, national or international economies; disruptions to public infrastructure, including transportation, communication, power and water; and Fiera's anticipation of and success in managing the risks implied by the foregoing.

These and other factors may cause Fiera's actual performance to differ materially from that contemplated by forward-looking statements. For more information, see the discussion starting on page 1 of Fiera's annual information form dated December 15, 2011 for the financial year ended September 30, 2011.

From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Major Economic Trends and Outlook for National Bank sections of the 2011 Annual Report, other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operate during fiscal 2012 and the objectives it has set for itself for that period. These forward-looking statements are made pursuant to the "safe harbour" provisions of Canadian and U.S. securities legislation. They include, among others, statements with respect to the economy-particularly the Canadian and U.S. economies-market changes, observations regarding the Bank's objectives and its strategies for achieving them, Bank projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditional verbs or words such as "outlook," "believe," "anticipate," "estimate," "project," "expect,""intend," "plan," and terms and expressions of similar import.

By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about the performance of the Canadian and U.S. economies in 2012 and how that will affect the Bank's business are among the main factors considered in setting the Bank's strategic priorities and objectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sector in particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies. Tax laws in the countries in which the Bank operates, primarily Canada and the United States, are major factors it considers when establishing its effective tax rate.

There is a strong possibility that express or implied projections contained in such forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank's control, could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include the management of credit, market and liquidity risks; general business, economic and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including the effects of the debt crisis in certain European countries; the lowering of the U.S. long-term sovereign debt rating by Standard & Poor's and the lowering of the sovereign debt rating of certain European countries; the impact of the movement of the Canadian dollar relative to other currencies, particularly the U.S. dollar; the effects of changes in monetary policy, including changes in interest rate policies of the Bank of Canada and the U.S. Federal Reserve; the effects of competition in the markets in which the Bank operates; the impact of changes in the laws and regulations regulating financial services and enforcement thereof (including banking, insurance and securities); judicial proceedings, regulatory proceedings or claims, class actions or other recourses of various nature; the situation with respect to the restructured notes of the master asset vehicle (MAV) conduits, in particular the realizable value of underlying assets; the Bank's ability to obtain accurate and complete information from or on behalf of its clients or counterparties; the Bank's ability to successfully realign its organization, resources and processes; its ability to complete strategic acquisitions and integrate them successfully; changes in the accounting policies and methods the Bank uses to report its financial condition, including uncertainties associated with critical accounting assumptions and estimates; the Bank's ability to recruit and retain key officers; operational risks, including risks related to the Bank's reliance on third parties to ensure access to the infrastructure essential to the Bank's business as well as other factors that may affect future results, including changes in trade policies; timely development of new products and services; changes in estimates relating to reserves; changes in tax laws; technological changes; unexpected changes in consumer spending and saving habits; natural disasters; the possible impact on the business from public health emergencies, conflicts, other international events and developments, including those relating to the war on terrorism; and the Bank's success in anticipating and managing the foregoing risks. A substantial amount of the Bank's business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank's financial results, businesses, financial condition, or liquidity.

The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management and Factors That Could Affect Future Results sections of the 2011 Annual Report. Investors and others who base themselves on the Bank's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. The Bank also cautions readers not to place undue reliance on these forward-looking statements. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.

Information(The telephone numbers provided below are for the exclusive use of journalists, other media representatives and shareholders.):

For Fiera Sceptre

Roch Landriault
NATIONAL Public Relations
Tel  [phone]

For National Bank of Canada

Claude Breton
Senior Manager, Public Affairs
National Bank of Canada
Tel.: [phone]

Hélène Baril
Senior Director, Investor Relations
National Bank of Canada
Tel.: [phone]