Montreal-based National Bank is poised to be the new owner of Silicon Valley Bank’s Canadian loan portfolio, the bank announced Tuesday.

The acquisition agreement follows a months-long bidding process for the bankrupt tech lender’s book of Canadian customers, after a run on the Bay Area bank in March triggered its collapse. The deal is expected to close in the coming weeks. 

Here’s what you need to know: 

What’s the deal? The acquisition includes $1 billion in loan commitments to SVB Canada’s customers. About $325 million of those commitments are outstanding. The book’s customers are concentrated in southern Ontario and Western Canada, in the life sciences, cleantech and technology sectors more broadly, Michael Denham, National Bank’s executive vice-president for commercial and private banking, told The Logic from SVB’s Toronto office on Tuesday. Denham declined to disclose how much the bank paid for the portfolio. “We’re comfortable, given our strategy, with the price that we ended up paying,” he said. 

What it means for National Bank: SVB’s business will be absorbed into National Bank’s technology and innovation banking group, led by Montreal-based Tuyen Vo, who has run the division since 2019. Denham said the portfolio represents a “material increase” in the growth of the bank’s tech and innovation business, but declined to share specific figures. The bank had been growing that division organically over the years, customer by customer, said Denham. “We’re going to continue to do that,” he said. “This just gives us access to that many more clients that much more quickly.”

What the deal doesn’t include: Denham said he’s meeting with SVB’s Canadian team over the next couple days to decide who might be a fit to join National Bank. The acquisition doesn’t include SVB’s employees—many of whom have already been poached by other Canadian banks—but Denham said there’s value in retaining employees who are familiar with the customers National Bank is acquiring with the loan book. “We have a large number of open positions across all parts of the bank,” he said. “So we hope to entice some of those folks to join us.” 

As banks compete to lend to innovative firms, they’re also competing for talent. “Capital is meaningless without expertise in the venture-debt sector,” said venture-debt veteran Mark McQueen, noting that all the major financial institutions have money they can lend to innovation-economy firms and room to grow in the market. “It is a people business.”

How we got here: SVB’s Canadian business—which was only licensed to lend money and can’t accept retail deposits—was left out of North Carolina-based First Citizens Bank’s purchase of most of the failed bank’s assets. PricewaterhouseCoopers, which has been controlling the liquidation for the Canadian branch, launched a sale process for the business in May and accepted bids until early July. 

What it means for venture debt: National Bank is Canada’s sixth-largest lender, with $418 billion in assets as of April 30. It isn’t the biggest tech lender of the bunch—that title goes to CIBC, said McQueen. 

But the deal signals National Bank’s aspiration to be a bigger player, said McQueen, who stepped down as president of CIBC Innovation Banking in February. “It takes some courage to buy early-stage company loans, particularly when some of the good names were probably picked off by competitors in the wake of SVB’s failure,” he said, noting that the bank now has the chance to grow its business with customers from its new portfolio.

PwC hasn’t disclosed what other banks or organizations made bids. While SVB’s loan portfolio may accelerate National Bank’s tech-lending business, Scott Chan, director of research for financials at Canaccord Genuity, said the SVB purchase is a “pretty minor deal” and isn’t material to National Bank’s overall capital position or its earnings.

While Chan believes Canada’s other big banks would have looked into the deal, it likely would have been even less significant for them given their size. RBC and TD Bank, for example, each have nearly $2 trillion in assets. 

All Canadian banks have lent less to the tech, life-sciences and cleantech sectors than their economic- and stock-market weight warrants, said McQueen. Of the 5,000 or so banks across North America, only a couple of dozen focus on the innovation vertical. “Clearly, it can handle more competition.”