Laurentian Bank headquarters are seen on Apr. 5, 2022 in Montreal. On Monday, the bank announced the abrupt termination of its CEO, Rania Llewellyn.Ryan Remiorz/The Canadian Press
Michael Mueller, who resigned his post as chair of Laurentian Bank of Canada earlier this week, left the lender as an act of protest over the abrupt termination of its chief executive officer, according to two sources with direct knowledge of the situation.
The bank announced the two departures early Monday, but did not say why or under what circumstances they had occurred.
The now-former CEO, Rania Llewellyn, was recruited three years ago to lead a turnaround at Laurentian LB-T, the country’s ninth-largest lender, which has struggled to compete with its bigger rivals and recently failed to find a buyer after putting itself up for sale. Ms. Llewellyn went into a board meeting on Sunday expecting to discuss a five-day service outage that began on Sept. 24, when the bank’s systems crashed unexpectedly during a planned technology upgrade, the sources said.
Instead, the board dismissed Ms. Llewellyn and named Éric Provost, who had been Laurentian’s head of personal and commercial banking, as her successor. Mr. Mueller then resigned in protest, the sources said. Ms. Llewellyn and Mr. Mueller did not respond to requests for comment.
The Globe and Mail is not naming the sources because they were not authorized to speak for the bank.
The bank said in a statement on Wednesday that it refrains from “discussing internal and personnel matters that come before the Board of Directors.”
“Our leadership team, including our new CEO Éric Provost, is currently singularly focused on fully resolving the issues resulting from the recent outage and actively working to rebuild trust and confidence among our valued customers across Canada,” the statement added.
It is extremely rare for a chair to resign at a major bank in Canada, and it is equally rare for a bank CEO to leave suddenly. Typically, an orderly succession plays out over many months, with choreographed transparency to avoid spooking investors, staff and customers. Laurentian will likely face questions from those quarters about the apparent lack of unity over the bank’s strategy.
Ms. Llewellyn is negotiating a severance agreement with Laurentian, according to the sources, and is expected to claim that personality conflicts with board members resulted in her dismissal, rather than performance issues. Regulatory filings show Ms. Llewellyn is entitled to a package worth up to $6.7-million.
Last year, Ms. Llewellyn earned $3.4-million after exceeding all the bank’s financial targets, including a $1.3-million cash bonus. Her pay was well above the $2.8-million compensation target set by the board at the beginning of the year.
This summer, Laurentian’s board launched a strategic review that included putting the bank up for sale, but no buyer emerged. In mid-September, the bank’s board concluded the review by recommitting to an accelerated version of Ms. Llewellyn’s turnaround plan, which focused on cutting costs and boosting profits from commercial lending.
In late September, Laurentian’s systems crashed, leaving individual and corporate customers unable to access their accounts for five days. In an interview on Monday, Mr. Provost apologized to customers and said the bank did a poor job of communicating about its technology issues. He said it was too early to tell if customers were leaving the bank because of the problems.
Mr. Provost said the board’s decision to offer him the CEO role on Sunday came as a shock, although he said he did know the bank’s directors considered him the designated successor. He declined to comment on Ms. Llewellyn’s departure.
As a result of the service outage, Laurentian waived all service fees for the month and kept branches open during a holiday on Monday to assist customers. Bank of Nova Scotia analyst Meny Grauman said in a report that doing without those service fees will have a material effect on Laurentian’s quarterly results.
Many other Canadian businesses, including Canadian National Railway Co. and Rogers Communications Inc., have left customers without service because of systems failures during technology upgrades. None of them cut ties with their CEOs over the problems.
Laurentian’s board has signalled that it continues to support the decision to shut down the lender’s auction without finding a buyer. The director who ran Laurentian’s strategic review, Michael Boychuk, was named the bank’s chair this week, to replace Mr. Mueller. Mr. Boychuk is the former CEO of BCE Inc.’s pension plan, BIMCOR.
Ms. Llewellyn’s predecessor, François Desjardins, retired in 2020 and was replaced with an interim CEO after the bank posted a string of weak financial results and slashed its dividend.
Mr. Mueller is a retired Toronto-Dominion Bank executive and former leader of the Public Sector Pension Investment Board. He joined Laurentian’s board in 2018. As the bank’s chair, he oversaw the CEO succession process that ended with Ms. Llewellyn’s arrival in 2020.
Ms. Llewellyn was born in Kuwait. Her family immigrated to Halifax in 1992, when she was a teenager. She joined Bank of Nova Scotia as a teller and rose through the ranks over 26 years. She was executive vice-president of global business payments when Laurentian recruited her, making her the first female CEO at a major Canadian bank. At the time, Laurentian board member Michelle Savoy said, “Rania Llewellyn is the right leader to usher in a new era at Laurentian Bank.”
Laurentian’s digital banking services lagged the sector, and Ms. Llewellyn made upgrading its technology a priority. In 2021, the bank introduced an app for smartphones, years after rivals had launched similar services.
Laurentian, founded in 1846, has 57 branches and $51-billion in assets. Its core business is commercial loans to clients in Quebec, Ontario and the United States.