Kuwait-Born CEO Breaks Glass Ceiling to Lift Canada Bank
(Bloomberg) -- Rania Llewellyn broke the glass ceiling as the first woman to lead one of Canada’s eight largest banks. Her challenge at Laurentian Bank of Canada is to revive a lender that has struggled for years to find growth.
Llewellyn, who was named Laurentian’s chief executive officer Tuesday, comes with an unusual biography for a Canadian bank chief. Born in Kuwait, she moved to Canada as a teenager from Egypt, where her father is from, and earned a master’s degree in business administration from St. Mary’s University, a small public college in Halifax, Nova Scotia.
She joined Bank of Nova Scotia as a part-time teller and began a 26-year climb that included a stint as CEO of Roynat Capital, a unit of the bank that finances medium-sized businesses. Before jumping to Laurentian, she’d been promoted to executive vice president in charge of Scotiabank’s global payments strategy.
Canadian banks rarely hire external candidates for the top job. Montreal-based Laurentian has unique problems, though. Llewellyn, 44, will need to shore up the bank’s capital position, which is the weaker than that of the country’s largest banks, while trying to undo the damage from the company’s prior missteps, including a problem with mortgage fraud.
The bank’s results have trailed analysts’ estimates in eight of the past 11 quarters, according to data compiled by Bloomberg.
“She’s being pulled in to do a very difficult job -- and we often see that’s the case, that a woman gets hired when the situation is very, very messy -- and she has the chops to do it,” said Tanya Van Biesen, executive director of the Canadian arm of Catalyst, a nonprofit that works to improve the position of women in the workplace. The two have known each other for about 10 years.
Llewellyn is smart, driven and “people-centric,” Van Biesen said, with experience in all parts of the banking industry, including technology and global roles, that will serve her well as a CEO.
Among the major moves she may make include raising new equity and divesting non-core assets like the Northpoint commercial-finance business, according to analysts. No matter what she does, it will require bold action to revive Laurentian’s shares, which have dropped 49% over the past five years, compared to a 12% gain for the S&P/TSX Commercial Banks Index.
“An external hire brings more potential for change, which is good,” Gabriel Dechaine, an analyst at National Bank of Canada, said in a note. “A new CEO will have more flexibility to take dramatic action to put the bank on more solid footing during the current downturn and into the future.”
Laurentian shares rose as much as 1.2% after Llewellyn’s hiring was announced and closed up 0.2% to C$26.36 in Toronto. The stock had fallen 41% this year through Monday.
“Rania Llewellyn is the right leader to usher in a new era at Laurentian Bank. She has a proven track record as an energetic, strategic thinker focused on customer experience and tangible results,” Michelle Savoy, the Laurentian director who led the search committee, said in a statement.
Llewellyn fills the gap left by Francois Desjardins, who stepped down in June after a five-year tenure that included an incomplete transformation plan and other woes. In 2017, the bank found customer misrepresentations on some mortgages that it sold to another firm. Laurentian said it would buy back C$180 million ($137 million) in mortgages sold to the firm.
Laurentian also took a hit in May, when it slashed its dividend 40%, the first payout cut by a large Canadian lender in almost three decades, and posted fiscal second-quarter earnings that missed analysts’ estimates because of higher provisions for loan losses.
While the bank increased a key measure of its capital known as common equity tier 1 to 9.4% at the end of its third quarter, that level is still “far from ‘fortress-like,’” National Bank’s Dechaine said, adding that the situation makes an equity raise possible.
The hiring of Llewellyn, who will also join Laurentian’s board, comes a little more than a month after Jane Fraser was named CEO of Citigroup Inc., which will make her the first female head of a big Wall Street bank.
While women have held some high-profile positions in Canada’s banking industry, Llewellyn will be the first female CEO of a major domestic bank. London-based HSBC Holdings Plc’s Canadian operations are run by Linda Seymour. She succeeded Sandra Stuart, who ran the operation for five years until her retirement. And Gillian Riley serves as CEO of Tangerine, Scotiabank’s online division.
Llewellyn’s appointment also is notable because Canadian banks typically choose CEOs from inside their firms.
Canadian Imperial Bank of Commerce entertained the idea of external candidates in its CEO search in 2014 before choosing internal candidate Victor Dodig. The last time Royal Bank of Canada went outside the firm for a top executive was in 1908.
Llewellyn also isn’t a native French speaker -- a disadvantage for the head of a firm headquartered in Montreal -- but has committed to learning the language, according to a note from RBC analyst Darko Mihelic.
Catalyst’s Van Biesen described Llewellyn’s appointment as “a big deal” for women in Canadian finance, who had been waiting to see one of their own take the helm of a major bank.
“It really fits into that category of ‘You’ve got to see it to be it,’” she said. “Rania is really charting a path for others here.”
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