The news: Canada’s Laurentian Bank agreed to break apart and sell itself after years of lackluster performance. Fairstone Bank will acquire Laurentian’s commercial lending business for C$1.9 billion ($1.4 billion). National Bank of Canada will buy Laurentian’s consumer and small business banking portfolios at book value.

National Bank will soon have snapped up banking assets from two competitors: In February, it bought Canadian Western Bank, which had about C$43.1 billion ($30.9 billion) in assets, expanding its footprint to Western Canada. Laurentian Bank is slightly larger, with C$49.9 billion ($35.7 billion) in assets.

Zoom out: National Bank of Canada is the country’s sixth largest bank, with C$553 billion ($395.8 billion) in assets. Fairstone, which has a history as an alternative lender, has only C$8.0 billion ($5.7 billion) in total assets. National Bank is still small compared to Canada’s Big 5—it’s barely more than half the size of CIBC. The dominance of Canada’s largest banks shows how difficult it is for smaller institutions to compete.

Our take: Laurentian has struggled to differentiate itself favorably. And its lack of scale means it hasn’t had the resources to modernize its infrastructure and operations or grow beyond its home market of Quebec.

With the breakup of banks, the list of large financial institutions in Canada is shrinking, and the largest are only getting bigger. The banks outside the Big 5 that are left must either scale (likely by being acquired by a larger competitor) or try niche strategies.