National Bank of Canada’s first quarter earnings slumped 37%as the Montreal-based lender wrote off its entire investment in Maple FinancialGroup.

The smallest of Canada's six major banks said its net incomefor the quarter totalled C$261m (US$189m), down from C$415m a year earlier.

That figure would have stood at C$427m if it hadn’t been for awritedown of its 24.9% stake in Maple.

Ontario Teachers’ Pension Plan was another major shareholder in Maple, which recently had its Germansubsidiary shut down by regulators due to spiralling debts linked to tax-evasion investigations.

So-called dividend-stripping trades were at the heart of thecontroversy.

The process involves buying a stock just before dividend rights expired, selling it, then taking advantage of a now-closed legalloophole that allowed both buyer and seller to reclaim capital gains tax.

Aside from the Maple writedown, National Bank delivered “soundperformance” in each of its three business segments, according to Louis Vachon,president and chief executive of the group. 

In a note to clients, analysts at CIBC Markets said that beyond the charge this quarter, the earnings impact shouldbe immaterial as Maple Financial was contributing less than 1% to National Bank's earnings.

“With no lasting earnings impact, there should be nolasting valuation impact either," the note added.