Laurentian CEO Says Overhaul to Focus on Loans, ESG, Digital
(Bloomberg) -- Laurentian Bank of Canada’s strategic overhaul, which the firm has been planning for about a year, will focus on expanding its commercial and capital-markets businesses, digitizing personal banking and building a culture focused on customers and performance, Chief Executive Officer Rania Llewellyn said.
“Think customer first -- we will create a culture with a relentless focus on the customer,” Llewellyn told shareholders during the Montreal-based company’s investor day Friday.
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. Laurentian on Friday reported fiscal fourth-quarter results that included pretax impairment and restructuring charges of C$189.4 million ($148.8 million) partly related to the turnaround plan.
The bank plans to increase its loans to more than C$18 billion in 2024 from C$14 billion this year, and continue expanding the U.S. portion of commercial loans, to 18% from 14% of the overall business, over the same period, Laurentian said in a presentation to investors. To achieve those goals, Laurentian plans to add 50 people next year as relationship managers and to support teams.
On the mortgage side, “we’ve determined that we don’t have a pipeline issue, but we have a throughput issue,” Llewellyn said. “Our ultimate goal is to replace our end-to-end platform, and we are currently exploring options with potential partners.”
Laurentian also will increase the environmental, social and governance focus throughout the organization by tying ESG and financial metrics to compensation, participate in more than 75% of sustainable bond issuances with its core clients annually and build an ESG-advisory business, Llewellyn said.
The bank also committed to stop directly financing oil and gas projects. Loans to the sector make up less than 1% of the bank’s overall commercial book, according to Eric Provost, head of commercial banking.
“For us, it’s just a question of making sure that we are identified as an organization that can industry-transit to a more friendly ESG-type footprint,” he said.
Laurentian plans to simplify its organizational structure and digitize its personal-banking business. The firm launched a mobile app and plans to consolidate all five of its websites into one by 2023.
Llewellyn has previously said the bank has “foundational gaps” in its digital offering, including the lack of a mobile app and tap-to-pay on its debit cards, and that its two separate digital platforms give users an inconsistent experience. To help remedy the problems, Laurentian hired Beel Yaqub as chief information technology officer in July. Yaqub previously was chief data officer at Royal Bank of Canada.
Laurentian shares have risen 28% this year, less than the 30% increase in the S&P/TSX Commercial Banks Index.
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