Laurentian Bank Says Desjardins Is Stepping Down as CEO

(Bloomberg) -- Laurentian Bank of Canada said Francois Desjardins is stepping down as president and chief executive officer of the Montreal-based lender.

Desjardins, who departs on June 30, is leaving after leading Canada’s seventh-largest domestic lender for almost five years, a period that included overseeing a seven-year transformation plan, mortgage mishaps due to documentation issues and client misrepresentations and, most recently, a rare dividend cut prompted by the economic impacts of the coronavirus pandemic. Desjardins, 49, is also resigning as director.

“Notwithstanding the recent difficulties presented by the pandemic, the bank remains in a strong position to deal with the challenges ahead with solid levels of capital and liquidity and excellent customer relationships,” Chairman Michael Mueller said in a statement Monday. “The ongoing implementation of the bank’s transformation strategy is well advanced and there is an opportunity to generate growth and enhance profitability through strong execution.”

Laurentian said it will immediately begin searching for a replacement to Desjardins, a 29-year veteran at the bank. It named as interim president and CEO Stephane Therrien, 55, who’s executive vice president of personal and commercial banking and head of LBC Financial Services.

Laurentian shares have fallen more than 40% since Desjardins took over in November 2015, making it the worst-performing Canadian bank in that time period. The stock fell 1.9% at 11:39 a.m. in Toronto, more than the 1% decline for the eight-company S&P/TSX Commercial Banks Index.

The announcement was surprising and Desjardins’ departure date abrupt given current economic uncertainty and market volatility, RBC Capital Markets analyst Darko Mihelic said in a note to clients. Laurentian needs stability and strong operational oversight, he said.

“Announcements such as these are sometimes followed by additional changes or actions by the bank/incoming executive, and it is possible that Stephane Therrien alters LB’s strategic path and/or delays some parts of the transformation plan while speeding up others,” Mihelic wrote. “It is too early to tell exactly what Mr. Therrien will focus on first, but we are somewhat skeptical that ‘growth’ should be the focus.”

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