The sudden departure of the CEO and chair of Laurentian Bank has raised questions about the bank’s future and its governance practices.
CEO ousted after two years
Rania Llewellyn, who made history as the first female and the first person of Egyptian and Jordanian descent to lead one of Canada’s largest lenders, was ousted last weekend after two years in the role. She was appointed in late 2020 to turn around the struggling bank, which had faced a series of challenges, including a labour dispute, a class-action lawsuit, an accounting error, and a regulatory probe.
Llewellyn had launched a strategic review of the bank’s operations, with JPMorgan Chase as its advisor, in 2022. The review aimed to explore various options, including a possible sale or merger of the bank, to improve its performance and profitability. However, no buyer emerged and the bank announced on Thursday that it would continue with an accelerated version of its turnaround plan.
The reasons for Llewellyn’s dismissal are unclear, but some analysts have speculated that she may have clashed with the board over the direction of the bank or the outcome of the strategic review. Some have also suggested that she may have been a victim of discrimination or sexism in the male-dominated banking industry.
Chair resigns in protest
The turmoil at Laurentian Bank was compounded by the resignation of its chair, Michelle Savoy, who reportedly quit in protest over Llewellyn’s firing. Savoy had been on the board since 2015 and became chair in 2019. She was also considered a diversity champion who had supported Llewellyn’s appointment and vision.
Savoy’s departure leaves a leadership vacuum at the bank, which has not yet named a permanent replacement for either the CEO or the chair position. The bank has appointed François Desjardins, a former CEO who had stepped down in 2020, as interim CEO, and Susan Kudzman, a board member since 2014, as interim chair.
The rapid turnover at Laurentian Bank suggests a tumultuous reality in Canada’s banking world, where succession issues, boardroom conflicts, and shareholder pressures can undermine stability and performance. The bank faces an uncertain future as it tries to regain trust and confidence from its customers, employees, investors, and regulators.
Turnaround plan focuses on efficiency and simplification
As part of its turnaround plan, Laurentian Bank said it would focus on “efficiency and simplification” to improve its financial results and customer experience. The bank said it would reduce its cost base by $100 million by 2025, streamline its product offerings, invest in digital capabilities, and strengthen its risk management and governance practices.
The bank also said it would pursue organic growth opportunities in its core markets of Quebec and Ontario, where it serves mainly retail and commercial customers. The bank said it would leverage its competitive advantages, such as its bilingualism, its regional presence, and its niche expertise in sectors such as real estate and equipment financing.
The bank acknowledged that it faces significant challenges and uncertainties in executing its turnaround plan, especially amid the ongoing COVID-19 pandemic and the competitive landscape of the Canadian banking sector. The bank said it would provide regular updates on its progress and performance to its stakeholders.
