Laurentian Bank has named both a new chief executive and board chair following a major system outage last week that the bank is still working to fully resolve.
The bank said Monday that Eric Provost, most recently head of personal and commercial banking, has moved into the role of president and chief executive with immediate effect.
Provost replaces Rania Llewellyn, who became the first woman to lead a major Canadian bank when she took on the role three years ago.
Montreal-based Laurentian also said director Michael Boychuk has been appointed chair of its board of directors, replacing Michael Mueller, who resigned from the board.
The leadership shakeup comes as the bank works to recover from a mainframe outage last week during a planned IT maintenance update.
The bank said on Monday that it had restored most services, but that access might still be slow or intermittent because of the number of people trying to access services. It said it was also still working to restore some functions.
In a letter to customers, Provost said the bank would be reversing monthly service fees for September, and opening some branches on Monday despite the statutory federal holiday as the bank tries to resolve the issues.
“We understand how precious your trust is, and we recognize that we have not delivered on it,” said Provost in the letter.
“My sincerest apologies for the inconvenience this outage may have caused you, your family, and your company.”
The bank said it would also work with clients who may have missed payments because of the outage, including help if someone’s credit score was affected because they couldn’t access their money.
The computer issue comes only weeks after Laurentian completed its review of strategic options without a deal to sell the bank.
New board chair Boychuk said Provost is well positioned to help turn things around.
“We have experienced challenges recently and the board is confident that Eric will successfully focus the organization on our customer experience and operational effectiveness,” he said in a statement.
Boychuk also thanked Mueller for his “many years of dedicated service,” and Llewellyn for her “hard work and contributions.”
Provost said his immediate priority will be to rebuild customer trust and address the impacts of the outage.
“Once the issues related to the outage are fully behind us, we will develop a new plan to ensure the sustained success of our bank,” Provost said.
Scotiabank analyst Meny Grauman said in a note that the change in CEO and board chair come after a turbulent few weeks at the bank, and that the failed sale process likely contributed.
“Based on the text of this morning’s press release, the trigger for this morning’s leadership changes appears to be more tied to the bank’s ongoing systems issues, but it is hard to believe that the outcome of the recent strategic review was not a factor as well.”
He said that while the bank hasn’t put out a cost estimate for the outage, he expects it to be material for the quarter at least.
Laurentian said it would share more information when it reports its fourth-quarter results on Dec. 7 and will unveil a renewed strategic plan at an investor day early in 2024.
Following the end of the strategic review, the bank said it would work on simplifying its organizational structure and focus on allocating capital and resources to its highest-grossing businesses and specialized products.
The bank has been working through a three-year strategic plan it launched in late 2021 to modernize operations, including with the rollout of its first mobile banking app.
Rating agency DBRS Morningstar said Monday it was “concerned” about recent events at the bank, noting there could be negative implications for Laurentian’s credit rating.
The agency said it was conducting a full review of the bank in November 2023 to “further assess the impact of recent events on the bank’s franchise strength and ultimately its credit ratings with a focus on [Laurentian’s] ability to maintain and grow its customer base, as well as improve financial results under new leadership.”
-With files from Investment Executive