(Bloomberg) -- Laurentian Bank of Canada said Chief Executive Officer Rania Llewellyn will leave immediately, to be replaced by personal and commercial banking chief Eric Provost. The bank’s chairman resigned.
The announcement brings a sudden and surprising end to the tenure of Llewellyn, the first woman to lead a major domestic bank in Canada. It comes a little more than two weeks after the lender concluded a review of strategic options without finding a buyer. The bank said at the time it will try to ramp up its current strategy, which includes growth in commercial lending and technology upgrades.
Provost’s priority will be to “rebuild trust” with customers and address the impact of a mainframe outage that occurred last week, according to a statement from the bank. The system failure, which affected customer deposits, bill payments and other services, occurred during a planned technology maintenance update, the bank said, adding that customer data and financial information remained secure at all times.
“Eric is the right executive to lead the bank at this critical point in its evolution,” said Michael Boychuk, who was appointed lead the board after previous Chairman Michael Mueller quit. “We have experienced challenges recently and the board is confident that Eric will successfully focus the organization on our customer experience and operational effectiveness.”
Laurentian shares were down 4.4% to C$28.95 at 10:20 a.m. Monday, the lowest in almost a year. They have fallen more than 19% since the Sept. 14 announcement that the strategic review had ended without a deal.
Several analysts questioned whether the leadership change was truly triggered by the IT problems. “It is hard to believe that the outcome of the recent strategic review was not a factor as well,” Scotiabank analyst Meny Grauman said in a note to clients.
‘Out of Nowhere’
KBW analysts Mike Rizvanovic and Abhilash Shashidharan cut their price target on the shares to C$33, from C$36, and wrote that the change “introduces even more uncertainty around the bank’s strategic direction going forward.”
“Given how sudden this is — it’s completely out of nowhere — I would imagine there was probably maybe some disagreements around the strategic review and what the bank was willing to do,” Rizvanovic said in an interview. “It would be extremely surprising to me if that was only predicated on IT issues.”
Speaking on BNN Bloomberg Television, Bryden Teich, a portfolio manager at Avenue Investment Management, said it appeared the management team tried to implement a vision that was not successful.
“I could imagine being in that board, having that conversation saying, ‘It’s time for new leadership,’ and it seems like a sort of a convenient way to say it’s because of the IT outage — which doesn’t really seem like it,” said Teich.
Provost will implement a three-part plan to fully resolve any outstanding issues related to the outage, improve communication with customers and launch a review of the technical issues, the bank said.
He had been promoted to an expanded role last month by Llewellyn, adding personal banking to his responsibilities in a management shakeup that also saw Montreal-based Laurentian adopt a smaller executive team.
Provost is a French speaker who hails from Quebec, a factor that could play well in the bank’s home province. Llewellyn, a former Bank of Nova Scotia executive from Toronto, was CEO for almost three years.
(Updates with analyst comments and share price change. An earlier version corrected spelling of Provost’s name in penultimate paragraph.)
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