Laurentian Bank Takes $164 Million in Charges Under Llewellyn’s Revamp

(Bloomberg) -- Laurentian Bank of Canada plans to take C$209 million ($164 million) of pretax charges in its fiscal fourth quarter as part of Chief Executive Officer Rania Llewellyn’s plans to turn around the lender.

The charges will reduce reported diluted earnings per share by about C$3.73 and lower the company’s Common Equity Tier 1 capital ratio by about 25 basis points, the Montreal-based bank said Tuesday. The CET1 ratio is expected to remain above 10%, the company said.

Llewellyn, who became CEO in October 2020, has been conducting a strategic review of Laurentian, which had struggled for years to generate growth and suffered from client misrepresentations on mortgages. The bank said it will hold an investor day on Dec. 10 to lay out its new plans.

Laurentian shares dropped 3.2% to C$40.02 at 9:56 a.m. in Toronto, the steepest intraday decline in almost eight months. They’ve gained 28% this year, compared with a 30% advance for the S&P/TSX Commercial Banks Index.

The charges include a writedown of C$93 million related to an overhaul of its personal-banking segment, C$49 million to cut its leased corporate office space Toronto, Burlington and Montreal by 50%, C$9 million in severance charges and C$38 million to scrap the second phase of an earlier-planned technology overhaul. The bank also will increase allowances and provisions for credit losses by C$19 million.

“These difficult but necessary changes make us more confident than ever about our future,” Llewellyn said in a statement. “We continue to maintain a strong capital and liquidity position that support our strategic investments in the bank’s future and reposition us for sustainable, long-term profitable growth.”

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